This State Will Pay Off Your Student Loans If You Move There To Buy A Home - Forbes

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As millions of Americans continue to struggle with $1.7 trillion in outstanding student loan debt, at least one state with a declining population has come up with a solution to attract new residents: offer to pay off their student loans.

Illinois’s “SmartBuy” program does just that, and can pay off up to $40,000 in student loans for borrowers who purchase a home there. Some studies have shown that borrowers struggling with student loan debt are far less likely to be able to get a mortgage to buy a home.

Here’s how the program works:

SmartBuy will pay off up to $40,000 in student loans, or a student loan balance of 15% of the home purchase price — whatever is the lower amount.
The program can also provide up to $5,000 towards a home downpayment or closing costs, on top of the student loan assistance. Some FHA mortgages require only minimal downpayments.
Eligible prospective homeowners in the Chicago area must have household income of no more than $109,200.
There is a maximum limit on the purchase price of the home, which ranges from $325,000 to more than $500,000, depending on the geographic location and other factors.
Importantly, partial payoffs are not allowed. The borrower’s full student loan balance must be paid off through the purchase of the home. But, if the $40,000 does not cover a full payoff, borrowers can pay off the remaining balance themselves through additional resources.
Second homes are not eligible for the program — the home must be the borrower’s primary residence, and they must live there for at least three years or they may have to pay back a portion of the student loan repayment assistance they received.
Unlike other student loan mortgage assistance programs, where the student loans are just wrapped into the mortgage (which the borrower must then pay back), the SmartBuy program functions as a student loan forgiveness program. Each month that you live in the home, 1/36th of the student loan assistance amount is forgiven. After three years, the full amount will have been forgiven.

While this type of program is not a solution to the complex student loan crisis impacting millions of Americans, it may provide real, meaningful assistance to borrowers who are struggling with student loan debt and cannot purchase a home as a result.

In the meantime, debate continues in Washington over broad student loan forgiveness. Last week, the Biden administration announced that attorneys under Education Secretary Miguel Cardona will be exploring potential legal authorities that could be the basis for widespread student loan forgiveness implemented through executive action — something that President Biden has resisted, but has not taken off the table entirely. The Department of Education will coordinate its efforts with the U.S. Department of Justice, which is also reviewing possible legal avenues for student loan forgiveness using executive authority.