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Hear the radio version of this story, from Vermont Public.

COLCHESTER, Vt. — Mohamud Diini’s office is bare but for a single plant and posters of the Boston Celtics and the college in nearby Burlington from which he graduated in the spring with a degree in business administration and a minor in accounting.

It’s not just because he’s had this job for only a few months that the space is otherwise so empty. To Diini, it’s surprising that he’s here at all.

“I did not want to stay in Vermont,” said the son of Somali immigrants who was brought to New England as a child and never got used to the cold winters.

Diini planned to bolt for somewhere warmer after he graduated from Champlain College, such as Atlanta or Charlotte, North Carolina. But there was one thing in Vermont that pulled him back: a new program that is paying him $2,500 a year toward the $20,000 of student loans he owes as long as he stays and works in the state for at least two years.

Mohamud Diini, who wanted to leave Vermont for somewhere warmer but decided to stay when he learned the state would help him pay off his student loans if he agreed to live and work there. “I did not want to stay in Vermont,” he says. Credit: Oliver Parini for The Hechinger Report

Even $2,500 a year “is better than zero,” he said, which is what he got when the Biden administration’s student loan forgiveness plan on which he’d counted was blocked in June by the Supreme Court.

“I was, like, hey, why not stay” in Vermont? said Diini, 23, who is working as a staff accountant for the local branch of a national insurance brokerage. “Maybe the two years can turn into five years” or even “turn into forever.”

That’s exactly what lawmakers behind the student loan repayment program hope. So do their counterparts in other states with aging populations and worker shortages, who are dangling incentives of as much as $100,000 toward paying off the student loan debt of college graduates if they agree to stay.

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“Generally, there is a massive shortage of talent, particularly in certain skilled talent areas,” said Jamie Kohn, senior research director for the human resources practice of the Gartner consulting firm, who said competition for college graduates is fierce. “Student loan repayment may be a way for states to mitigate some of the loss of wage growth that people are feeling” so they not only stay, but can afford to start families and buy houses.

“It definitely will help their dollar stretch a lot further if they’re not weighed down by those student loans,” Kohn said.

So much of a worry has student loan debt become that nearly seven in 10 current college seniors said it will affect their life and career choices after graduation, a survey by the career services company Handshake found.

Mandy Dwinell with snowmobile trailers outside her office at a Vermont snowmobiling association. Dwinell is getting help from the state of Vermont with paying off her college loans, in exchange for staying and working there. Credit: Oliver Parini for The Hechinger Report

Now, states that need young and educated workers are stepping into the breach.

“From the states’ perspective, if they want people in the state to stay and have kids, reducing debt is going to help people make that decision,” said Arielle Kuperberg, an associate professor of sociology at the University of North Carolina at Greensboro and co-author of a study about how student loan debt affects behavior, commissioned by the Council on Contemporary Families at the University of Texas at Austin.

At least 42 states have enacted student loan repayment or forgiveness programs since 2018, according to the National Conference of State Legislatures. Almost all of them are for professionals in specific areas of shortages — mostly teaching and healthcare — or who agree to work in underserved areas.

At least 42 states have enacted student loan repayment or forgiveness programs since 2018, mostly for professionals in specific areas of shortages or who agree to work in under-served areas.

Doctors, dentists and pharmacists who work for at least three years in underserved parts of Utah, for example, can get up to $75,000 of their student loans paid off. South Carolina will pay off up to $5,000 per year of student loans for teachers. Illinois will help repay the student loan debt of school social workers.

So short of veterinarians are some areas that veterinarians who agree to stay and work in Arizona, Colorado, Iowa, Minnesota, Ohio or Utah can also get help from those states with student loan repayment — in Colorado, of up to $90,000.

In Arkansas, pathologists who work in the state crime laboratory can get up to $100,000 of their student loans forgiven. North Dakota helps repay the student loans of graduates from eligible universities and colleges there trained in any of a long list of high-demand occupations, including teaching, engineering, architecture, finance, healthcare, information technology, social work and firefighting.

And New York’s Get on Your Feet program offers student loan relief for up to two years for residents who graduated from New York high schools and colleges, have specific types of federal student loans and earn below a certain income.

Now two states, Vermont and Maine, have started offering student loan repayment support to new college graduates with degrees in any field who agree to stay and work, with few strings attached.

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Maine has the nation’s oldest population by median age; Vermont, the third oldest. Vermont has also seen five private colleges close since 2016, each a conduit that once brought young people there who put down roots and stayed. In September, after declines in enrollment, three of its public universities were merged.

That leaves a smaller population of graduates, a decline that’s beginning to happen nationwide and that can result in labor shortages, slower economic growth and declines in state tax revenues. Unemployment in Vermont is just 1.8 percent, third lowest in the country after New Hampshire and Maryland. Maine has projected a need for 75,000 more workers in the 10 years ending 2029.

“This is not a panacea. It’s not like people are going to flood to Maine because they’re going to get $2,500 a year. But it is a chance to come and see the long-term benefit of staying.”

Maine State Sen. Matthew Pouliot, R-Kennebec

This mismatch between labor supply and demand only got worse with the early retirements of many older workers during and since the Covid-19 pandemic. Businesses in Maine now say the availability of professional and skilled technical workers has become a top concern.

The influx of younger workers to the labor force has been far outpaced by the growth in the number of Americans 65 and older nationwide, which is up by 34 percent since 2010, according to the Census Bureau. Since around 2013, the number of births in half of all states has fallen below the number of deaths.

All of these trends are heating up the competition for young skilled workers.

“If you look at America writ large, our economy is growing in ways our talent pipeline isn’t keeping up with,” said Nate Wildes, executive director of the employer- and community-funded nonprofit Live + Work in Maine and the owner of a microbrewery in Brunswick. “That mismatch on the national level is also motivating for states.”

Michele Karode, an outreach professional at the University of Vermont who helps administer the state’s new Green Mountain Job & Retention Program, on the university’s busy quad. Credit: Oliver Parini for The Hechinger Report

Maine’s Student Loan Repayment Tax Credit was expanded and broadened last year in a bipartisan effort. It provides a state income tax credit of up to $2,500 a year to people with associate, bachelor’s or graduate degrees and student loan debt who live and work in Maine, with a lifetime cap of $25,000.

“We’re facing a demographic winter,” said state Sen. Matthew Pouliot, who sponsored the measure.

“This is not a panacea. It’s not like people are going to flood to Maine because they’re going to get $2,500 a year. But it is a chance to come and see the long-term benefit of staying,” said Pouliot, who owns a real estate company in Augusta. “If you’re a recent graduate in your mid- 20s and you’re renting an apartment, $2,500 a year can be a big deal.”

This year, 13,982 Mainers claimed a total of $31.4 million in tax credits toward their student loan repayments, according to the state’s Department of Economic and Community Development.

Student loan repayment programs that require graduates to stay and work are also more politically palatable than blanket debt forgiveness, said Pouliot, a Republican. “It’s one thing to just wipe out student loan debt. But this doesn’t do that. We give back if you show up. Learn a skill, and then we’re going to pay you back.”

The idea is certain to spread, said Wildes.

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“A lot of other states are figuring this out,” he said. “We get a lot of phone calls from governors’ offices and legislators asking for feedback and insight about how the policy is working.”

In Vermont, the Green Mountain Job & Retention Program, launched in the spring with bipartisan political support, will repay up to $5,000 a year of the student loans of new graduates of colleges and universities here who agree to stay and work in any kind of job for at least two years.

So far, 212 people have applied for the program, for which the state has budgeted $4 million, and 95 have been approved, toward a goal of 400, according to Vermont Student Assistance Corporation figures provided by the University of Vermont, or UVM. 

Patrick Walsh, an associate professor of economics at Vermont’s Saint Michael’s College, in a classroom at the college. Without some kind of incentive to stay, he says, young people who come to Vermont for college will “turn around and leave, or kids who grow up here in Vermont will go somewhere else.” Credit: Oliver Parini for The Hechinger Report

To people elsewhere, a number that small “sounds a little adorable,” said Patrick Walsh, an associate professor of economics at Vermont’s Saint Michael’s College. He pulled out his laptop on a wooden table in a classroom and opened it to a population chart. But “when I looked at the numbers, I was actually surprised at how effective it actually might be.”

That’s because, since 2010, the number of people in Vermont aged 25 to 39 has increased by an average of 1,100 per year, according to the Vermont Legislative Joint Fiscal Office. And “in the context of that net migration of this younger population,” Walsh said, 400 more people per year “is actually kind of meaningful.”

The federal government’s Public Service Loan Forgiveness program erases all debt for graduates in certain public service jobs but requires 10 years in a job, compared to the Vermont program’s two, said Michele Karode, who helps administer the Vermont plan in her role as an outreach professional at UVM. “You have to really be in it for those 10 years. This being two years seems much more attainable.”

Many out-of-staters still enroll at Vermont’s remaining higher education institutions, including Middlebury and Bennington colleges and the flagship UVM, causing a spike in the population of 18- to 22-year-olds. More than 70 percent of the students at the public university, whose picturesque quad outside Karode’s window is crowded with them, come from out of state. But most immediately leave right after graduating.

“Either they’ll come here for college, and then turn around and leave, or kids who grow up here in Vermont will go somewhere else for college and never come back,” Walsh said.

Mimi Duong, who graduated in the spring from the University of Vermont. Her original plan was that, when she graduated, “I’m out of here.” Now she’s staying, in exchange for help from the state in paying off her college loans. Credit: Oliver Parini for The Hechinger Report

Mimi Duong stayed in Vermont for college but still planned to leave. “My entire college experience, I’m, like, you know, I want to go where the money takes me. I’m out of here,” said Duong, 22, who grew up in rural St. Johnsbury and graduated from UVM in the spring with a degree in public communication. “I do imagine that any Vermonter growing up or in my age range really is thinking about leaving” for the shiny skyline of a city somewhere else.

But she, too, was persuaded by the student loan repayment offer to stick around, in a new job as outreach and member coordinator of the Vermont Professionals of Color Network, based in a co-working space just a few blocks from the campus.

Duong has close to $30,000 in student loan debt. “It’s overwhelming to have that much money to pay back,” she said. “The loan program was a relief.”

Two years didn’t seem too much to ask from recent grad Mandy Dwinell, either — especially in exchange for help repaying the $20,000 student loan debt she racked up in a college career interrupted by family obligations.

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“I’m, like, okay, I can definitely commit to that,” said Dwinell, who graduated in the spring with a bachelor’s degree, at 40, and now works for the Vermont Association of Snow Travelers, an association of snowmobilers housed in a cabin at the edge of a hill with the Green Mountains in the background, and where her dog — a boxer mix — accompanies her to work.

“When I was in high school, I’m, like, as soon as I graduate, I’m out of here, I’m not looking back,” said Dwinell.

The number of Americans at or beyond retirement age has grown by 34 percent since 2010, threatening state tax revenues and heating up the competition for young skilled workers.

Now she’s pretty sure she’ll stay.

“I absolutely love it here,” Dwinell said. “I mean, look, at this view. You can’t get much better than this.”

Patrick Walsh, the Saint Michael’s College economist, agreed that other states will have to get into this game.

“A lot of states are going to feel that pressure,” Walsh said. “If you’re one of the few states who’s not doing a program like this, then you’re going to be left behind even faster.”

This story about student loan repayment was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Additional reporting by Liam Elder-Connors. Sign up for our higher education newsletter.

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