How Moving Could Help You Pay Off Student Loan Debt

If you’re burdened with student loans, you might be looking for an out-of-the-box solution to your debt. Here’s one: Try moving someplace new to pay off your student loans faster.

Of course, if you love where you live, don’t let your student loans drive you away. But if you’re interested in relocating anyway, moving could be a smart choice for your finances.

Not only could you lower your cost of living or become eligible for student loan assistance, but some states will help you pay off your loans in exchange for you moving there.

Moving and student loan debt: 4 surprising upsides

From lowering your cost of living to qualifying for student loan assistance, here are four ways moving could help you conquer your student debt:

1. You could lower your cost of living
2. You could become eligible for student loan repayment assistance
3. You could save thousands in a state with no income tax
4. You could reduce your bills to $0 by leaving the country
Plus: Get creative about paying off your student loan debt

1. You could lower your cost of living

Several factors affect how much you spend each month, from your lifestyle to your recurring bills. One major influence is where you live.

Consider the cost-of-living difference between New York City and Austin, Texas, for example. Both are thriving cities with lots to do, but consumer prices, including rent, in Austin are nearly 40% lower than in New York City, according to Numbeo. Living in Austin over New York City could create a ton of room in your budget.

Moving could also save you a lot in rent each month. According to ApartmentList, San Francisco, New York City and Boston have some of the highest rent prices in the country. The median costs of a one-bedroom apartment are $2,399, $1,967, and $2,030, respectively. (All prices can fluctuate in real time depending on the market.)

But if you packed your bags and moved to Tucson, you’d face a median rent of $914 for a one-bedroom. In Chicago, that number rises to $1,291, and in Miami it’s $1,478. Changing cities could cut your monthly rent in half.

This strategy of reducing rent helped Logan Allec, a Certified Public Accountant, pay off more than $35,000 in student loans. Allec also founded and runs the personal finance site Money Done Right.

“For a few months out of college, I rented out a room in a nice area for nearly $1,000 per month,” Allec said. Then “an opportunity arose for me to share a room in a house,” he added.

Allec’s rent decreased from $1,000 to $275, which allowed him to put hundreds of extra dollars toward his student loans each month and pay them off years early.

Of course, lowering your cost of living won’t save you money if you’re limiting your job prospects. You still need to make sure you have employment opportunities and can reach your income goals.

But if you choose a destination with a solid, well-paying labor market — or perhaps get a job that lets you work from anywhere — you could transform your cost of living. And with all that money you’re saving each month, you could put additional payments toward your student loans and be out of debt years ahead of schedule.

2. You could become eligible for student loan repayment assistance

Depending on where you live, along with some other criteria, you could be eligible for student loan repayment assistance from your state. Some states offer student loan assistance to new residents, and others have loan repayment assistance programs (LRAPs) for residents who work in certain fields.

If you’re a full-time pharmacist in Arizona, for instance, you could earn up to $105,000 in loan assistance from the Arizona State Loan Repayment Program. Other jobs that commonly qualify for state-run LRAPs include lawyers, teachers, doctors, nurses, dentists and other health care professionals.

But you don’t necessarily need to work in a particular profession to get loan assistance. Kansas, for instance, offers up to $15,000 in loan assistance for five years to anyone who establishes residency in one of its rural opportunity zones. And Hamilton, Ohio, will provide up to $10,000 to new residents through its Talent Attraction Program (TAP) Scholarship.

Some places, such as Tulsa, Oklahoma, offer financial incentives to remote professionals willing to move and work there for at least a year. Tulsa’s program offers a $10,000 grant, coworking space memberships and other perks to online workers.

Although this money isn’t for student loans, you could choose to put it toward your debt. If you’re drowning in student loan debt, moving to a state that offers financial assistance could make a big difference. Check out our database of LRAP opportunities for more information.

3. You could save thousands in a state with no income tax

Along with potentially making you eligible for student loan repayment assistance, moving could also save you money on taxes. In the U.S., eight states don’t charge state income tax:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Although New Hampshire doesn’t tax wages, it does tax interest and dividends. According to a Student Loan Hero study, eliminating state income tax could potentially save the average borrower $1,977 per year.

If you used those savings to pay off your student loans, you’d chip away at your debt faster — and save even more money on interest. Note, however, some of these states have higher-than-average sales or property taxes that could offset some of the gains, so make sure you look into this before making any big decisions.

Changing states isn’t the only way to save on taxes, either. Chartered Financial Analyst and financial wellness expert Anna Yen saved big on taxes by moving to Hong Kong after graduating from the University of Pennsylvania.

“I chose to move out of the U.S. to Hong Kong three years out of graduation for higher income and to gain expat tax breaks,” Yen said. “The Foreign Earned Income Exclusion eliminates federal tax for the first $90,000 of income. This also eliminated state and city taxes, which I was originally paying in New York, some of the highest in the country.”

Thanks to her savings, Yen paid off $15,000 in student loans less than five years after graduating. If you’d like to move abroad, you might need to work for a foreign employer who can sponsor you for a visa. Or, if you work online, you could adopt a digital nomad lifestyle, moving between countries when your visitor visa expires.

4. You could reduce your bills to $0 by leaving the country

If you’re interested in leaving the country like Yen did, there is another way to use your wanderlust to conquer student loans.

This approach works a little differently than the previous one, since it doesn’t involve you making extra payments on your loans. Instead, you could put your loans on an income-driven repayment plan, which would adjust your payments according to your income.

When making this calculation, the government looks at your tax returns and your adjusted gross income (AGI). But if you’re living abroad, you can take advantage of the Foreign Earned Income Exclusion, which as Yen notes above, could exclude much of your income from taxes (as long as you meet eligibility requirements). Because of this tax perk, your AGI could be $0.

As a result, your payments on an income-driven plan could also be $0; you could pay nothing each month without running the risk of going into default. After 20 or 25 years, your entire loan balance could be forgiven. Your loans could be wiped away, but you might be responsible for paying taxes on the forgiven amount.

This strategy only works for expats who plan to live and work out of the country for two decades or more. If you return to the U.S., you’ll be facing a larger balance than when you started. It also only applies to federal student loans — private loans aren’t eligible.

Also, be aware that there’s no guarantee that income-driven repayment plans won’t change or be eliminated in the future. So while this option is somewhat risky and probably not that common, it’s worth knowing about for anyone looking to live abroad long-term.

Get creative about paying off your student loan debt

No one enjoys the feeling of having student loans hanging over their head. Debt can become burdensome if it’s eating up a lot of your paycheck every month and standing in the way of your other goals.

So it could be time to come up with creative solutions for getting rid of your student loans. Moving to a state with a lower cost of living or no income tax, for instance, could be the game-changer you need to take back control of your finances.

Or you might take a page out of these borrowers’ books and start a side hustle to make extra payments on your student loans. One home baker, for example, earns over $1,000 per month with her fidget spinner cookies, and a PR professional teaches group fitness classes on the side to pay off his debt.

By thinking outside the box when it comes to making or saving money, you could change your financial situation and pay off those student loans once and for all.

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