Some U.S. states are trying to tempt young professionals to set up home there by offering to pay off their student debts in exchange for buying their first properties there.
The recently launched “SmartBuy” programs in the states of Illinois and Maryland offer to pay off the student loan debts of young adults who obtain a mortgage there, for example.
The offers are designed to appeal to attract more young talent to the states, who perhaps, might be able to take advantage of the new remote work trend to purchase homes in more affordable parts of the country. Still, as always, there are a few eligibility requirements and caps that young professionals will need to meet to take advantage of the offers.
Illinois is offering to pay up to $40,000 in student loans or a student loan balance that is 15% of the home purchase prices, whichever is lower, Forbes.com reported. In addition, the program will also provide up to $5,000 towards a down payment or closing costs. But the purchase price of the home is capped, depending on the house’s location and other factors. Forbes said the upper limit lies between $325,000 and $500,000. Also, in the Chicago area, buyers must have a household income of no more than $109,200.
Another potential obstacle for some buyers is that Illinois’s deal stipulates that the $40,000 must pay of all of the student debt. So if a buyers owes more than this on their student loan, they will need to pay off the remaining balance themselves first, before they can take advantage of the Illinois SmartBuy program. This is to ensure that young homeowners will be entirely free of student loan debt when they take on the mortgage.
Maryland’s version of the SmartBuy program offers a student loan payoff of up to 15% of the home purchase price, with similar conditions attached.
Other states have created student loan debt reimbursement programs for young home buyers, but these tend to be more targeted, with the goal of attracting healthcare professionals. The Michigan State Loan Repayment Program for example will cover up to $200,000 in student loan for primary medical, dental and mental healthcare providers, but they must agree to work full-time in stipulated Health Professional Shortage Areas at a non-profit health clinic for a minimum of two years.
For those who’re looking to buy a home in the Golden State, the California State Loan Repayment Program will pay off student debt of up to $50,000 for healthcare professionals who commit to working in a designated “underserved medical community” for at least two years.
Other states with student debt reimbursement programs for young healthcare workers include Delaware, Georgia and Michigan.