Cities Offer Innovative Approach for Student Loan Debt

Niagra Falls has a population problem. There are half as many people living there than 50 years ago. The city is having problems attracting younger residents, so Seth Piccirillo, director of community development, is taking aim at the graduating class of 2013 with an attractive offer. Live in Niagra Falls, and the city will help you to pay off your student loans. Since the average student emerges with both a diploma and a $40,000 debt, Niagra Falls could be on to something.

Deepening Student Debt Crisis

According to the findings published by the Federal Reserve Bank of New York in May of this year, outstanding student loan debt increased $30 billion in the first three months of 2012 for a total of $904 billion outstanding. A four-year degree at an in-state public college now costs approximately $17,000 a year, with private schools charging more than $50,000 annually. Estimates suggest that 94 percent of all students carry some amount of educational loan debt.

The Niagra Falls plan calls for loan payments of $3500 annually for two years to help students who have completed degrees over the past two years. Applicants must be willing to purchase a home or rent an apartment in downtown Niagra Falls as one of the qualifying requirements. The initial pool of recipients will be drawn from Niagra University and Niagra County Community College. The pilot program has a budget of $200,000 that officials believe will fund 20 people.

Why Third-Party Payment Options Are Attractive

Due to federal budget cuts, increasing numbers of students are being forced to rely on private student loans with high variable interest rates. These loans do not carry the options for forgiveness or income adjustment available on direct loans and other government loans, which also have a 6.8 percent fixed interest rate. Although private loans have long been considered a last resort for educational funding, many students have no other choice.

Deals like the pilot program in Niagra are also being tried by smaller western cities in an effort to lure young professionals into rapidly depopulating rural regions. Similar programs have been used for years to bring doctors to such areas, so the concept is not new and will likely grow in popularity since there are no easy or fast solutions to the student loan crisis.

After four years of recession that wiped out retirement funds and personal savings, graduates can no longer rely on their parents as a fallback position. With unemployment still hovering near 9 percent, many recent graduates are unemployed or under-employed in minimum wage jobs outside the professions for which they trained.

Protests like the Occupy movement have called for the wholesale forgiveness of federal student loans, but given the condition of the national debt, such a move is highly unlikely. This raises the very real specter of an entire generation that will be wage slaves for years to come, deferring major life choices like buying homes and starting families because they cannot pay for those things and meet their debt obligations.

Programs like the one being offered in Niagra are an innovative answer for working loan “forgiveness” that can also revitalize flagging communities. The student loan debt crisis threatens to devalue a college education in the minds of American youth unless a solution can be found to lower the cost of a degree or to provide a viable venue for loan repayment. “Outside the box” solutions are badly are needed, and communities like Niagra Falls are taking the initiative to accomplish exactly that.


Ms. Bekiroglu is a published author, freelance writer and editorial consultant. After receiving a Bachelor of Arts degree from the University of South Florida, she faced the mounting obstacle of paying over $24,000 back in student loan debt. Determined to eliminate the debt, she became knowledgeable about money management. She seeks to educate others with tips on managing student loans and other kinds of debt, as well as in general personal finance and money saving tips.


  1. Early Years says

    i have a lot of student loan debt and want to consolidate. however, i’m sure that because it is a private loan they’re going to run my credit. do you know what is the lowest score i can have to consolidate?

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