Young professionals on the hunt for a new location may find incentives from states—even offers to pay off their student loan debt in exchange for purchasing a home.
Illinois and Maryland recently launched “SmartBuy” programs that will pay off student loan debt for young adults who get a mortgage in the state.
Sound too good to be true? There are eligibility requirements and caps that young pros will have to meet.
For example, Illinois is offering to pay up to $40,000 in student loans or a student loan balance that is 15% of the home purchase price, whichever is lower, Forbes.com reports on the program. The program is also providing up to $5,000 toward the down payment or closing costs. But the purchase price of the home is capped depending on the geographic location and some other factors. The upper limit is between $325,000 to about $500,000. In the Chicago area, eligible homeowners also must have a household income of no more than $109,200.
One potential obstacle to getting this deal: The $40,000 in debt relief must help pay all the student debt with the purchase of the home. No partial payments are allowed. If the home buyer owes more than $40,000, borrowers must pay off the remaining balance themselves. The goal is to help the young homeowner be free of student loan debt when they take on the mortgage.
Maryland has another version of the “SmartBuy” program, which provides a student loan payoff up to 15% of the home purchase price.
Several other states also offer versions of student loan debt reimbursement programs that are mostly geared to attracting more healthcare professionals to the area. For example, the Michigan State Loan Repayment Program will cover up to $200,000 in student loans for primary medical, dental, and mental healthcare providers if they agree to work full-time in Health Professional Shortage Areas at not-for-profit health clinics for two years. The California State Loan Repayment Program will pay student loans up to $50,000 for healthcare professionals who also commit to working in underserved medical communities for two years. View a list of more state offerings at Lifehacker.com.