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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jun 15, 2012

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Cities across the nation are feeling the economic effects of baby boomers retiring and passing away which dwindles populations and shrinks the labor force.

But desperate times call for desperate measures and city officials certainly feel desperate in Niagara Falls, N.Y., where Seth Piccirillo, director of community development is attempting to court young professionals by offering to assist in paying off their student loans.

According to Census reports from 50 years ago, Niagara Falls boasted a population of 100,000. However, mass retirements and outward migrating residents have reduced that number by nearly half in the present day.

Should it fall below 50,000 by the time of the next census is released, then many officials fear some of their city’s federal assistance will evaporate.

“We’ve lost a lot of talent, a lot of brain power,” said Piccirillo. “For 50 years we’ve been asking ourselves: how do we keep our young people?”

Interestingly, the answer Piccirillo devised may also be the solution to the nation’s ongoing student debt problem: pay off residents’ student loans.

Confident in their plan, the city has devoted $200,000 to the project and is predicting that “the graduating class of 2013 will be our first real swing at it,” according to Piccirillo.

Like many classes before it and many classes that will follow it, the class of 2013 will graduate with heavy college debt—an unfortunate burden that inspired Piccirillo.

“College debt is at the forefront of so many stories you see now. The New York Times just reported that student debt has topped $1 trillion; 94 percent of students now have some amount of debt,” he said.

Niagara Falls presents a fairly straightforward plan: graduates with a 2- or 4-year degree, which was earned in the past two years, can apply for up to $3,500 a year for up to two years that can be put towards repaying student loans.

Niagara University and Niagara County Community College will be targeted first—due to their obvious close proximity—but the city hopes that students across the country will take up the offer as the program expands to allow other college graduates.

In order to qualify for the program applicants must rent an apartment or purchase a home in a specified downtown area.

Piccirillo explains, “There’s no doubt in my mind that getting even 100 to 150 people could revitalize the neighborhood.

The Start of a New Trend

A similar project has been launched in Kansas, but with much larger incentives for those burdened with student loans. Fifty counties in Kansas have established Rural Opportunity Zones (ROZs) which offer Kansas income tax waivers for up to five years and possible student loan repayments of up to $15,000.

Like the Niagara Falls program, applicants in Kansas must be residents of an ROZ county and have student loan debt from the acquisition of either an associate’s, bachelor’s or post-graduate degree.

Kansas, like many other cities across the country, shares the same ills of Niagara Falls. Chris Harris, the manager of the student loan incentive initiative in Kansas, explains that the goal is “to provide incentives for rural counties that have lost population over past decades.”

So far the program has been fruitful, drawing in 338 applications—roughly a third of which were from out of state.

“Our hope was that we’d get young professionals to move. Physicians, nurses, lawyers, accountants,” said Harris. “And that’s what we have seen—health professionals, teachers, veterinarians, accountants and a surprising number of lawyers.”

A proverbial poster child of the Kansas program is Dr. Aaron Zook who relocated to rural Pratt, Kan.

After his medical residency in Denver, Zook was attracted to Kansas by the state’s student loans debt payment program since his student loans were worth roughly $200,000. “Any help I can get is going to be real nice,” he explained to KSN TV.

Back in Niagara Falls, Piccirillo remains a realist in his outlook and knows that the program “in and of itself, won’t fix the city.”

But it could very well be a step in the right the direction.