The student loan debt has already reached the $1 trillion mark and continues to climb. Nearly all of the 2012 graduating class (94%) has some amount of student debt compared to 43% in 1993. But future debt isn’t keeping high school graduates from pursuing the college dream. Sallie Mae, the nation’s largest private lender, reported a 20% increase in loan originations for 2011, and Wells Fargo has reported an increase in loans every quarter for the past two years.
As the economy continues struggling to find its footing, a few small, rural communities have begun incentive programs to draw young professionals to their cities. Fifty counties in Kansas are participating in the Rural Opportunity Zones (ROZ) program initiated by the state’s Department of Commerce.
The program’s incentives include one of two options: income tax waivers for up to five years, or up to $15,000 in student loan repayment assistance. In order for these young professionals to become eligible for the program they must establish residency in a ROZ county, lived outside of Kansas for five or more years prior to establishing residency, and have earned less than $10,000 in Kansas Source Income in each of the five years immediately prior to establishing residency. The department’s program started accepting applications on July 1, 2011, and the benefits started on Jan. 1 of this year.
Participants in the program have come from across the country, including California, Florida, Washington, and New Hampshire, according to Dan Lara, a public information officer with the Kansas Department of Commerce.
“The state has been very pleased with the results so far,” Lara said. “Participants are coming from a wide range of occupations, and they are filling critical vacancies – healthcare, professional services, education. The real key will be, at the end of the five-year program, whether most of those who moved remain in rural Kansas. The state is confident that they will based on job growth, low cost of living, high quality of life and additional tax reform that the Brownback Administration (Kansas governor) wants to implement.”
He said there have been more than 350 applicants and about two-thirds are currently active in the program. He added that those who have been inducted into the program were either ineligible or were put on a waiting list because a county had used up the amount budgeted. Applicants on the waiting list must wait for the particular county to budget more ROZ funding to be accepted.
Most applicants have chosen the student loan repayment option mainly because Kansas and non-Kansas residents are eligible. He said there has been an increase in interest from those out of state because they are eligible for both incentives.
Lara said the new state tax reform offers even more incentive, especially for small business owners and entrepreneurs.
“If you move from out of state to a ROZ county in Kansas and start a small business, not only do you not have to pay state income tax for five years, but your non-wage income from your business is exempt from taxes,” he said. “And, if you have student loans, you can have up to $15,000 of those repaid [and] that’s a great deal.”
Several other rural areas have started incentive programs like Curtis, Neb., which offers three different types of financial assistance to new residents: Incentives from Businesses ($2,300 in gift certificates); New Home Construction Incentive ($4,000 down payment assistance); and Family Incentives ($500 to 1,000 for families with children).
Miah Michaelson, Assistant Economic Development Director for the Arts in Bloomington, Ind., said their Department of Economic and Sustainable Development began Bloomington Entertainment and Arts District (BEAD) programs to offer incentives for arts-based businesses locating within specific areas of BEAD.
“We also offer various grants and loans for construction and rehab in various areas of BEAD and our Urban Enterprise Zone for arts-based and other types of business development,” Michaelson said. “Micro loans for arts-based startups are available through the SEED Corp. program of our local Small Business Development Center.”
Indiana’s average average student loan debt is $27,001 and Nebraska’s is $21,227. Kansas’ average student loan debt is $22,280, which is in the middle of the road compared to the lowest (Utah – $15,509) and the highest (New Hampshire – $31,048).
“It’s very important,” Lara said of drawing young professionals to the rural communities. “The Brownback Administration has made spurring job growth its No. 1 priority. Rural Kansas has a lot of business and companies that have current job openings, but no one to fill them. The ROZ program is helping those entities attract workers. When they have workers, they will be able to expand and that helps our rural communities stay vibrant. Young professionals also are more likely to put down roots in a community – get married, have kids, etc. When they do that, they are much more likely to become long-term residents in their communities.”
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