Sara Brassfield is more than $125,000 in debt for a college degree she never completed. She has no savings and can’t imagine ever buying a home.

“For what I [owe] for my education, I could have had a mortgage,” she said. “I could have owned a home. And that would have been a lot more valuable than having nothing.”

“I am one pay cheque away from being homeless.”

Brassfield is one of more than 40 million Americans with some type of student debt. Altogether, they owe more than $1.3tn. The class of 2015 is the most indebted ever, with most graduates having taken out an average of $35,000 in loans.

Now help may be at hand from unlikely quarters. Some cities and state governments are starting schemes that offer young people money to put towards a house deposit, or to buy their student debt off them, in exchange for moving to parts of the US that do not usually attract millennials.

Among those leaving the coastal cities for towns in the centre that are willing to give them a break is 31-year-old Lee Waldron.

Lee Waldron, pictured with his wife, Sara Jo, and daughters Penelope (left) and Lydia, has cut his student debt dramatically through a buyback scheme in rural Kansas. Photograph: Courtesy of Lee Waldron

When he graduated from college in 2006, he was $30,000 in debt. Ten years later, there is about $10,000 left. The main reason Waldron was able to pay down so much of his debt is the Kansas Opportunity Zones programme.

Designed to reverse the trend of declining population in many of the state’s rural areas, the local lawmakers created a scheme that would offer college graduates tax breaks and up to $15,000 in student loan repayment. In 2015 alone, Opportunity Zones provided $1.2m in student loan repayments.

Waldron and his wife, Sara Jo, were living in California when his mother-in-law called to tell him of Kansas’s programme, which was set up in 2011 and has now been expanded to 77 counties in the state. After moving back to Kansas, his wife’s home state and where he went to college, Waldron ended up qualifying for $3,000 a year in loan repayments for five years.

“I was making these minimum payments six months after graduation. I was just chipping away at it. This basically cut my timeline in half,” said Waldron. Without the programme, he said, he would have been less open to taking on more debt, such as a mortgage.

As it is, the year they returned to Kansas, the couple were able to buy a house, and now live with their two young daughters in Hillsboro, Marion County. “We probably wouldn’t have bought our first home for a few more years had I not known I was going to have some wiggle room in my budget.”

While in California, Waldron worked as a youth pastor and coached high school football. In Kansas he took a job as a director of admissions at his alma mater, Tabor College.

He is convinced that schemes such as Opportunity Zones work for both the individuals and the counties.“It originated to attract younger families back to these smaller counties to hopefully settle in, to create jobs, to bring money to the counties,” he said. “I am a success story. You got someone to come back. You got someone to settle in. I have a feeling my family and I are going to be here for a while.”

Road to debt

Student debt has ballooned in the US over the past generation, with a college degree coming to be regarded as the equivalent of a high school diploma: a costly requirement for most entry-level jobs. One year at a private, four-year college costs on average $30,000 for tuition and fees alone. At a public college, in-state students pay on average $9,000 a year, while out-of-state students pay $23,000.

Of course, student loan debt is not a problem restricted to the US. In the UK, student debt has soared since the introduction of tuition fees in 1998. However, tuition costs are still lower in the UK than in the US, and graduates start repayments only when they earn more than £21,000 (roughly US$29,000) a year. For the most recent graduates, repayments are set at a flat rate of 9% of any income above the £21,000. Similarly, in Australia, graduates only begin to pay back their debt once they earn more than AU$54,000 (£28,000/US$39,000). In the US, student loan repayment bills start arriving months after graduation even if the graduate is unemployed.

“[Millennials are] not only taking on debt at a higher rate, they’re paying it off at a slower rate,” said Lucia Dunn, an economics professor at Ohio State University. “These poor kids come out of college with the equivalent of a mortgage already.”

Brassfield, 33, took a singular route to deep indebtedness. She had always hoped to attend a good college and pursue a career in art. Instead, she dropped out of high school, got a GED (a high-school equivalency diploma) and worked in a series of “dead end jobs”. It was not until her mother – who had been a graphic artist – was dying that Brassfield finally decided to apply to college at 24.

Brassfield said she had been just one course away from finishing her degree when she ran out of money and couldn’t afford to take out another loan.

Sara Brassfield, formerly a student at the Art Institute of Portland. Photograph: Natalie Behring/The Guardian

Brassfield does not regret going to college, but she does regret picking the wrong one. She attended the Art Institute of Portland. Its parent company, Education Management Corporation, was sued in 2011 for illegally paying recruiters and exaggerating the career placement abilities of its schools.

In November 2015, EMC agreed to repay $95.5m and forgive more than $102.8m in loans held by more than 80,000 former students. But Brassfield was not one of them. The settlement was less than 1% of the $11bn that the lawsuit first sought to recover.

Outraged that EMC was able to settle for so little, Brassfield joined the Debt Collective - a remnant of the Occupy Wall Street movement, which has helped hundreds of debtors organise and go on strike and refuse to pay back $182m in student debt.

“How is it that EMC can settle for less than 1% of that total due? If I could settle for that percentage, I’d give them a cheque right now. I would sell everything I own,” she said. “I would run 100 miles through sleet and snow, barefoot. I would do it because I just want this off my back.”

Attracting millennials

Live Niagara Falls, a scheme similar to the one introduced in Kansas, was designed to attract millennials into the city in New York state by helping them with their living costs. It’s a two-year programme available only to college graduates, with participants getting about $3,500 a year.

Bobbie Thoman, 26, was one of the five people selected for the programme in 2013. The financial incentive was helpful for her, since she had roughly $40,000 in student debt.

“It’s scary. You’ve graduated from school. You have all of this student debt and then you have to find a job and look into getting a house and a car,” she said. “It’s so much financial responsibility. So to have that money there so that I can make my monthly payments is huge. It’s so helpful.”



Ken Lambert, 28, was attending the same master’s course as Thoman, who convinced him to apply. Lambert criticised the programme for not doing enough to help participants find local jobs and said he was forced to move away to find work. “The money was helpful in terms of paying some of my bills,” he said, “but [it] wasn’t enough to make a big difference.”

The Niagara Falls programme is small, with funding for just 20 participants. Since it started in 2013, 14 people have taken part, with four more to be chosen this year.

Lambert, the only participant to move away, went to Philadelphia to work for AmeriCorp, a civil society project. Since the group is funded by the US government, participants can delay paying their student loans without accruing interest. Still, Lambert worries about how he will pay off the $60,000 he owes in student loans.

“I worked really hard in my life to try to move myself up,” said Lambert, who grew up in poverty but went on to gain degrees in political science and international relations. “I don’t want to be in debt for like 50 years. I am terrified. I want it paid. I hate that I owe this much money.”

A home of their own

Other millennials have been given a helping hand to pursue their dreams of home ownership, just not necessarily where they had expected.

A few days before Christmas, Samantha Harris was eating a pizza on the living room floor of her new home in Detroit. The 25-year-old had just been given the keys.

Samantha Harris in front of her new home. Photograph: Courtesy of Samantha Harris

Harris, who had previously doubted she would ever be able to afford a place of her own, bought the house through the Live Downtown programme in Detroit, an attempt to regenerate the bankrupt city by encouraging millennials to move there.

Live Downtown began in 2011 and soon became a lifeline for the city and for millennials looking to lay down some roots. A handful of businesses quickly moved into central Detroit, offering financial incentives to 16,000 employees to move with them, triggering a revitalisation of the area. One employer offering this incentive was Quicken Loans, where Harris works as a senior training consultant overseeing the company’s mortgage bankers.

Harris could choose between getting $20,000 to use towards a down payment on a home in the downtown area, or receiving $3,500 over two years to supplement rental costs. Harris’s new three bedroom home is valued at $275,000, with a 30-year mortgage. “My first home could actually be my forever home.”

Additional reporting by Jessica Glenza in New York.