Bloomberg Government Insider

Student Debt Relief Helps Kansas Boost Rural Population


Megan Horinek will pay off her student loans within five years

Photograph by Christopher Wurzbach for Bloomberg Businessweek

Megan Horinek will pay off her student loans within five years

When Megan Horinek graduated from Fort Hays State University in Kansas in 2010 with a marketing degree and $20,000 in student loan debt, she dreamed of returning to her hometown 140 miles away.

She moved back this year to Atwood, a hamlet of only 1,194 that calls itself the “Pride of the Prairie.” After working for Kraft Foods (KFT) in Wichita, Horinek accepted a lower-paying job in nearby Cheyenne County partly because of a new state program that offers as much as $15,000 toward student loan repayment for people who relocate to areas hurt by population declines. “To know that I will be able to have my loans paid off within five years is even better than just finding a job,” says Horinek, 24, who works as a consultant for the Kansas Small Business Development Center. “If I do choose to get married or start a family, then I won’t have this hanging over my head.”

State and local governments nationwide are joining some private and nonprofit companies in offering student debt relief to attract residents, talent, and consumer dollars. Outstanding U.S. student loans total about $1 trillion, topping credit-card debt, according to estimates by the Consumer Financial Protection Bureau. The class of 2010 on average left school with $25,000 in debt, according to the Institute for College Access and Success in Oakland, Calif.

In Kansas the population-boosting perk has attracted 436 applicants from 35 states, says Chris Harris, who manages the program for the state commerce department in Topeka. “We were trying to address a loss of young population,” he says. People drawn to the state through the program will reinvigorate local economies by bringing their families with them and buying homes, he explains.

The state allocated $1 million for the first year of the program, which applies to 50 rural counties that have seen a 10 percent population drop since 2000. Graduates with associate’s to post-graduate degrees are eligible for the program, which spreads payments out over five years.

The idea is spreading: Niagara Falls, N.Y., offers a loan repayment plan to attract young people, and lawmakers in Nebraska have considered creating a similar program, partly out of concern that the Kansas incentive will lure college graduates across their shared border.

Student loan forgiveness with conditions is already common in health care. Thirty states and District of Columbia have repayment or consolidation plans for dental or medical workers, according to a 2011 American Dental Association report.

The time is ripe for more employers to use debt relief to attract talent, says Paul Combe, president of American Student Assistance, a debt counseling nonprofit. “It’s so prevalent today; it’s part of the fabric,” he says of the heavy debt burden borne by graduates. “It’s moved away from cocktail chatter.”

“The economic impact—it’s more than just one person,” says Horinek, who has purchased a home in Atwood. Her return has inspired her sister to move her own family back to Kansas from Nebraska.

Smialek is a reporter for Bloomberg News in Washington.

Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus