Will This Student Loan Repayment Program Save A Large Slice Of Rural America?

At the time, Waldron was living in Reedley, Calif., about 100 miles south of Bakersfield, with his wife Sara Jo and 1-year-old daughter Lydia Jane. Waldron was saddled with $30,000 in student-loan debt from his four years at Tabor College, a Christian school in Hillsboro, Kan. Given his income and the obligation to pay the minimum amount due each month on his student loan, it seemed inconceivable he would ever be able to afford to buy a home.

But the Rural Opportunity Zone program offered a way out. Under this plan in 50 rural Kansas counties, the state repays student loans over five years for people who move into these areas. The maximum benefit during that time is $15,000, so Waldron would still be responsible for one-half of his debt -- but that was much more manageable. “It was a weight off my mind,” he said.

The burden got even lighter when Waldron was able to secure a job as Tabor's director of enrollment operations. Now, he and his family have moved to Hillsboro and bought a home. His wife’s family lives nearby, and the pace of the community -- with its tiny main street, four restaurants (only one serving liquor), and 10 churches -- suits the Waldrons better than that of the West Coast.

It's not a smoke and gun show like where I come from in California,” Waldron said. “It's small, it's friendly, it's slow, it's great to raise a family in.

There are a variety of student-loan repayment plans offered by the military to attract enlistees and by some small towns to lure health-care workers, but the Kansas program is one of the few broad-based efforts to repopulate and revive communities that are in economic decline and thus unable to entice educated people to reside in them.

The bottom line is we need more young, said Clint Seibel, the executive director of the Hillsboro Development Corp. We've done a great job educating our young people in rural America and then we buy them a suitcase and send them to a major university and never see them again.

The Kansas program was launched in July of last year in 50 designated Rural Opportunity Zones, most of them relatively poor agricultural communities that have lost about 10 percent of their population since the last census. The median household income of Hillsboro, a town of about 3,000 people, is less than $30,000.

The program draws about one new applicant per day, and nearly 75 percent of the applicants meet the requirements. Most of the sign-ups are from Kansas and between 25 and 35 years old. The rest are generally from neighboring states such as Nebraska, Oklahoma and Colorado, but some are from as far afield as Florida and New York.

Most people applying for the program have lifelong connections to rural communities: Either they grew up in small country towns or they have family members there. But there are a few anomalies -- people from New York or Los Angeles, for example, looking for a complete change of lifestyle.

A much less ambitious program has been started in Niagara Falls, N.Y., a famous but decaying town dependent on a declining, low-rent, tourism trade, whose reputation as a stunt city has kept it from luring more high-end visitors. The local population is plummeting, and the town is danger of losing critical federal funds.

To turn this around, Niagara Falls has offered to cover $3,500 in student-loan payments in each of two years for people willing to move into the community. Only about $200,000 has been earmarked for this program, which will include about 20 families. Officials say they receive on average about 30 emails a day inquiring about the opportunity.

The program is focused on a single neighborhood “that's on a tipping point, said Niagara Falls Director of Community Development Seth Piccirillo.

Piccirillo described the neighborhood as being near the iconic Falls with some prime real estate, but with many other buildings that have to be demolished and rebuilt.

Piccirillo said he believes that if he can entice young, educated people to the neighborhood, new startup businesses and commercial expansion would follow -- and migration to Niagara Falls would snowball. However, without the student-loan incentive, the neighborhood will likely continue its slow demise, he added.

If the private market was going to this, it already would have,” said Piccirillo. “Government needs to do this. But we don't want to do this forever; we don't want this to be a 20-year program.

In Hillsboro, two primary metrics will be used to measure the success of the Rural Opportunity Zone program, according to the Hillsboro Development Corp.'s Seibel: rising school enrollment and new business startups. Business launches are still lagging, but school enrollment is up, as at least eight new families have moved into Marion County as a direct result of the student-loan payment benefit. And that, Seibel said, means greater state education funding for local schools.

So far, most people moving into Rural Opportunity Zones in exchange for student-loan repayments take jobs in primary or secondary education or in health care. A smaller number of them take over existing businesses or launch new ones.

Although the U.S. student-loan debt level at a total of $1 trillion is at a record high -- and a newly minted college graduate owes on average more than $25,000 at present, a 24 percent increase in less than a decade -- these repayment programs may not be enough to attract sufficient numbers of the best and the brightest to failing communities to make a substantial difference in the local economy. Many of these towns have few employment or social opportunities, and much of the local real estate is less than desirable.

But communities participating in the Kansas programs “are taking the opportunity to heart and are being really introspective, said Patty A. Clark, Kansas state director of rural development for the U.S. Department of Agriculture. They are motivated, she said, to strategically address their shortfalls to lure more-educated residents. Hillsboro, for instance, recently completed construction of a $2 million aquatic center and has a nine-hole golf course in addition to baseball diamonds and tennis courts.

There are basic needs whether you're rural or urban: You need jobs, you need good housing, you need infrastructure, Clark said, and she added that loan repayment can only work as an incentive if those preconditions already exist.

Rural Kansas would seem to be an odd place for a program like this to take hold. Generally conservative and small-government oriented, agricultural communities in this part of the Midwest tend to oppose the idea of handouts to outsiders.

And, indeed, the Rural Opportunity Zone program has many detractors in the region, including the Jefferson City (Mo.) News Tribune, a leading newspaper in Kansas’ neighboring state to the East. Worried that what Kansas has established will spread to Missouri, the paper noted recently in an editorial that “attracting young professionals is an initiative of the Jefferson City Area Chamber of Commerce, but the initiative does not offer any direct monetary incentives. Yet.”

And then the newspaper went on to raise this concern: “Do developments in New York and Kansas signal a coming avalanche in tax incentives and loan repayments to attract young professionals? We hope not. Using tax dollars to attract individual residents who meet specific qualifications seems inequitable and elitist. But, bad ideas have been known to become popular.”

The Kansas program is also under attack closer to home. Many natives of rural communities resent the encroachment of those they perceive as overeducated outsiders: They view them as carpetbaggers, moving into the communities just long enough to pay off part of their loans before moving on to places they prefer to live.

There is resentment of people who leave [to go to college] and do not return, said the USDA’s Clark. And, she added, there is also animosity toward educated people not necessarily born there, especially when they try and become engaged in the community and bring a new and different perspective.

Some of this enmity has reached local lawmakers. In its latest session, the Republican-led Kansas Legislature slashed $250,000 from the Rural Opportunity Zone program, just a year after it was initiated. That’s a little too soon to say if it's a success or a failure, said Clark.

The difficulty of justifying the Rural Opportunity Zones program in the short run with tangible metrics is apparent even to participants such as Waldron. Just because somebody moves in doesn't mean it's just going to work,” he said. “We've got to keep a progressive mind-set, building and changing.

The Waldrons are doing their part. Lee’s goal is to increase the Tabor College student body to about 1,000 in three years from 650 now, and Sara Jo has become a youth pastor in the community. The couple also thinks they’ve convinced two friends to move to Hillsboro, largely because of the student-loan incentive provided by the Rural Opportunity Zones program.

Perhaps if more families taking advantage of the Rural Opportunity Zone benefits act like the Waldrons, any leftover acrimony toward the newcomers will disappear -- and the program will survive long enough to see if it works. If it does achieve its aims, it could provide a sorely needed shot in the arm for Midwestern farm communities while allowing overly indebted young families to finally put their schools behind them.