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Even if President Joe Biden’s student debt cancellation plan falls through, there are still state forgiveness plans Americans can tap.
Forty-seven states and Washington, D.C., have their own state-based student loan forgiveness plans. Many offer more than one. Each program is slightly different, but most are narrowly tailored to a single industry or profession like doctors, teachers, police officers, farmers or people who agree to work in places with a dire need for their services. They may also require you to work in a job for a required length of time.
If the Supreme Court strikes down Biden’s federal proposal to cancel up to $20,000 of student debt for each qualified borrower, Americans may want a backup plan. Student loan payments are expected to resume either 60 days after the Supreme Court issues a decision on the relief program, or 60 days after June 30 – whichever comes first. That means repayment is likely to start this summer.
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But remember, since these programs are only open to residents, “you need to consider other aspects of your life – relationships, earning power, entertainment options, cost of living,” warns Ted Rossman, Bankrate.com senior industry analyst.
What kinds of student loan forgiveness plans do states offer?
Forty-seven states and Washington, D.C., offer student debt forgiveness plans, with more than half of them offering more than one kind. You can find a list of those states here, but we’ll highlight a few to give you a taste of what’s available.
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Maryland student loan forgiveness programs
The state offers three programs.
- For residents in good standing on their debt, SmartBuy 3.0 pays off up to 15% of a home purchase, with a maximum of $50,000, if you have at least $1,000 in student debt and a 5% downpayment. Any remaining balance must be paid in full by the closing date. The roughly 6-year-old program has provided about $5 billion in mortgage assistance, $121.7 million for down payments and $25 million in debt relief.
- Janet L. Hoffman Loan Assistance Repayment Program is for residents who provide public service in Maryland State or local government or in Maryland nonprofit agencies helping low-income or underserved residents.
- Maryland Dent-Care Loan Assistance Repayment Program for dentists treating the state’s most vulnerable populations.
New York student loan forgiveness programs
The Empire State offers seven programs.
- Six are for specific professions including district attorneys, assistant district attorneys or indigent legal services attorneys; licensed social workers; farmers; child welfare workers; nurses and teachers.
- The last one is for state-school graduates from 2015 and later, and who earn less than $50,000 annually, live in the state and are enrolled in certain federal payment plans.
Kansas student loan forgiveness programs
The Sunflower State offers three student loan forgiveness programs aimed at boosting the state’s healthcare industry and rural areas.
- The Rural Opportunity Zones Student Loan Repayment Program provides up to $15,000 in student loan repayment assistance for up to five years as long as you live in one of the state’s rural counties.
- The Kansas State Loan Repayment Program provides up to $25,000 per year to medical, nursing, dental and behavioral/mental health care professionals who commit to practicing at least two years at sites in federally designated Health Professional Shortage Areas (HPSA).
- The Kansas Bridging Plan (KBP) forgives loans for primary care and psychiatry resident physicians. The goal is to encourage them to stay and practice in Kansas after they complete their residency. KBP provides at least $26,000 in exchange for a 36-month commitment to practice in an eligible state county. Each year, it has up to 14 slots for primary care and three slots for psychiatry. The state says 85% of KBP participants continue to practice in Kansas.
Are state student loan repayment plans worth it?
It depends on what your larger career goals are and if you want to move to a different state and possibly, live in a remote area for a while.
If those rules align with your career goals, “then it’s great,” said Bankrate’s Rossman. But he also noted that borrowers need to ask themselves whether the program requirements are “not your desired career path or where you want to live?”
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People should also consider moving costs and tradeoffs involving earning power and lifestyle factors.
“My advice would be to consider the total package,” he said. “It’s probably not worth moving just for a student loan forgiveness program.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.