Illinois Smart Buy: Student Loan Relief for Homebuyers | Prof. Hernandez

For many student loan borrowers, the dream of homeownership feels like a mathematical impossibility, but there’s hope in 2026. Between debt-to-income (DTI) ratios and the weight of monthly payments, the “American Dream” is often deferred, if ever achieved.

However, Illinois has provided a significant legal and financial step towards reducing student loans and buying a home through the Smart Buy Program. Established under Governor Pritzker in 2020, this isn’t just a mortgage; it’s a financial reset.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on February 4, 2026.

Listen: The Professor’s Audio Briefing.

The $40,000 Opportunity to Reduce Student Loan Debt

Since its inception, the Smart Buy Program has eliminated over $17 million in student loan debt for hundreds of Illinoisans. This program is specifically designed to help you qualify for a mortgage by removing the very thing holding you back: the student loan balance.

Smart Buy Program Requirements: Do You Qualify?

As a bankruptcy attorney reviewing contracts with clients, I always tell my clients to look at the fine print. As a law professor, I now repeat that mantra to student loan borrowers: To qualify for up to $40,000 in debt relief, you must meet the following criteria:

As a bankruptcy attorney reviewing contracts with clients, I always tell my clients to look at the fine print. As a law professor, I now repeat that mantra to student loan borrowers: To qualify up to $40,000 in debt relief, you must meet the following criteria:

The Debt Floor & Ceiling: You must have at least $1,000 in student loan debt, with the program covering up to a maximum of $40,000.

Credit Standard: A minimum credit score of 640 is required.

Residence: The home must be your primary residence, and new constructions are eligible.

History: Both first-time and repeat homebuyers can qualify.

Education: Completion of a homeownership education course is mandatory before closing.Professor’s Note: Income and purchase price limits apply based on your county. You can view the current income and purchase price limits here.

Expanding Your Options Under the Smart Buy Program

If the Smart Buy Program isn’t a perfect fit, Illinois offers the Access Forgivable program for down payment assistance:

$6,000 Forgiveness: Get 4% of the purchase price with a maximum of $6,000, for down payments and closing costs. This is a forgivable loan after 10 years. If you stay in the home, you never pay it back.

30-Year Stability: It offers a 30-year fixed-rate mortgage across FHA, VA, USDA, and conventional loans, making it easier to budget your monthly expenses.

Universal Access: This option is available to both first-time and repeat homebuyers.

The Big Picture: Is Relocation in Your Future?

Relocating isn’t possible for everyone, but if you aren’t in Illinois, don’t lose hope. As remote work becomes the standard, many states are competing for your residency. Some states offer credits toward a new home or direct student loan repayment for remote employees.

The Professor’s Class is in Session: The Math of Freedom

As a published law professor, class is in session. I don’t look at $40,000 in debt relief as just a “handout.” I look at it as a fresh start, without having to file for bankruptcy. Let’s look at the cold, hard math of what a $40,000 student loan balance actually costs the average borrower.

The 10-Year Debt Sentence

If you carry $40,000 in student loans at a modest 6% interest rate:

• Monthly Payment: Approximately $444/month.
• Total Interest Paid: You’ll pay roughly $13,280 in interest alone over 10 years.
• Total Out-of-Pocket: That $40k actually costs you $53,280.

The “Smart Buy” Advantage

By using the Illinois Smart Buy program to wipe our student loan, you aren’t just “saving” $40,000. You are instantly increasing your household’s disposable income by over $5,300 per year.

In mortgage terms, that $444/month you used to send to the Department of Education could instead support an additional $70,000 to $80,000 in mortgage principal, furniture, or even paying down other debt.

The Professor’s Conclusion

Don’t let your student loan balance dictate your housing future. Whether through Smart Buy or other state-specific programs, the law often provides paths to homeownership that your bank might not mention.

The Takeaway: Don’t Trade Time for Interest

To save $40,000 in cash after taxes, the average worker has to earn nearly $55,000 to $60,000 in gross income. Why spend the next decade of your life working to “break even” when the law provides a simple and beneficial option to delete the debt today?

If you qualify for Smart Buy, you are essentially getting a decade of your career back. Time is money, and in the world of debt and finance, this is a “no-brainer.”

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon books. To access my YouTube channel, click this link.

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