2025 Illinois Student Loan Forgiveness & Repayment Plans Guide

Illinois borrowers face a pivotal year in 2025. Sweeping changes to federal programs, fresh updates to repayment plans, and expanded forgiveness opportunities mean there’s never been a better time to optimize your student loan strategy. Whether you’re navigating the new SAVE plan, pursuing Public Service Loan Forgiveness (PSLF), or exploring unique state-specific assistance, this guide covers all the critical updates and step-by-step paths to relief.

Table of Contents

1. New Updates for the SAVE Plan in 2025
2. Public Service Loan Forgiveness (PSLF) Updates
3. Income-Driven Repayment (IDR) Changes
4. State-Specific: Illinois Student Loan Forgiveness Programs
5. Step-by-Step Application Guide
6. Real Success Stories
7. Common Questions for Illinois Borrowers

1. The SAVE Plan: Major 2025 Updates

The Biden Administration’s revamped Savings on a Valuable Education (SAVE) Plan is the most affordable federal repayment option in 2025. Effective July 1, 2024, full SAVE plan benefits are now live, offering:

• Monthly payments capped at 5% of discretionary income for undergraduate loans
• No interest accrual when payments do not fully cover interest—your balance won’t grow if you pay every month
• Forgiveness in as little as 10 years for those who borrowed $12,000 or less
• Family size and income are updated yearly to ensure flexible payments

Tip: Eligible Parent PLUS loan borrowers can access SAVE via consolidation.

Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!

Test Your Expertise: The Complexities of the 1031 Exchange

As a sophisticated real estate investor, you understand that the 1031 Exchange is a cornerstone strategy for tax deferral and wealth accumulation. But beyond the basics, the intricacies of the 1031 Exchange rules can pose significant challenges. This quiz is designed to test your in-depth knowledge and highlight critical nuances that separate casual investors from true experts in 1031 Exchange transactions.

Instructions: Choose the best answer for each question.

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Page 1 of 5

Question 1: Understanding "Like-Kind" in a 1031 Exchange

Which of the following scenarios most likely qualifies as a like-kind property exchange under IRS Section 1031, allowing for 1031 Exchange tax deferral?

a) An investor exchanges a portfolio of publicly traded REIT stocks for a commercial retail building. b) An investor exchanges their primary residence, used for personal living for 15 years, for a duplex intended for rental income. c) An investor exchanges raw land held for appreciation in Texas for a stabilized apartment complex in Florida, both held for investment. d) An investor exchanges a classic car collection (personal property) for a single-family rental home (real property).

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Question 2: Navigating the 45-Day Identification Period for a 1031 Exchange

An investor sells a multi-family property on June 15th for a 1031 Exchange. According to the strict timelines, by what date must they identify their replacement properties to comply with the 1031 Exchange requirements?

a) July 30th of the same year, as the 45-day period includes weekends and holidays. b) August 29th of the same year, allowing for an extra 45 days if needed. c) December 12th of the same year, aligning with the 180-day completion period. d) January 1st of the following year, if they plan to file for an extension.

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Question 3: The Role of a Qualified Intermediary (QI) in a 1031 Exchange

Why is the engagement of a Qualified Intermediary (QI) absolutely critical for the validity of a 1031 Exchange?

a) The QI provides investment advice and helps the investor choose the best replacement property for their 1031 Exchange strategy. b) The QI acts as a liaison with the IRS, directly negotiating tax liabilities related to the 1031 Exchange process. c) The QI holds the proceeds from the relinquished property's sale, preventing the investor from having "constructive receipt" of funds, which would invalidate the 1031 Exchange. d) The QI provides legal and tax advice to ensure the 1031 Exchange is perfectly compliant

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Question 4: Understanding "Boot" and its Impact on a 1031 Exchange

An investor sells a commercial building with $500,000 in equity for a 1031 Exchange. They purchase a replacement property for $450,000, effectively reducing their debt by $50,000. What is the tax implication of this scenario within the 1031 Exchange framework?

a) The entire 1031 Exchange is disqualified because the investor "traded down" in value. b) The $50,000 in reduced debt is considered "boot" and will be immediately taxable as partial gain in this 1031 Exchange. c) There are no immediate tax implications, as the primary goal of the 1031 Exchange is only about the "like-kind" nature of the properties. d) The investor can defer the $50,000 as long as they pay off other personal debts with the funds, still qualifying for a full 1031 Exchange.

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Question 5: Advanced 1031 Exchange Strategies & Flexibility

An investor aims to sell a highly appreciated single-tenant retail property and replace it with multiple smaller, diversified multi-family units to spread risk. Which of the following 1031 Exchange identification rules best allows for this diversification strategy, maintaining eligibility for a 1031 Exchange?

a) The "Three Property Rule," where the investor can identify up to three properties of any value, regardless of the relinquished property's value, for their 1031 Exchange. b) The "200% Rule," allowing identification of any number of properties, provided their aggregate fair market value does not exceed 200% of the relinquished property's value for the 1031 Exchange. c) The "95% Rule," which states that if more than three properties are identified, the investor must acquire at least 95% of the aggregate value of all identified properties to qualify for the 1031 Exchange. d) All of the above are valid identification rules within a 1031 Exchange, offering flexibility for various investment strategies.

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The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

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Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

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How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

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What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

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Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

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2025 Income Chart Example (Illinois)

Source: U.S. Department of Education, Illinois Regional Data 2025

2. 2025 Public Service Loan Forgiveness (PSLF) Updates

PSLF remains a premier forgiveness option for Illinois public employees, healthcare workers, teachers, and nonprofit personnel. Key policy clarifications in 2025:

• Substantial expansion of qualifying non-profit employers (including more state and locally funded agencies)
• Simplified recertification: PSLF borrowers now recertify employment and payments directly via their StudentAid.gov dashboard
• Count of qualifying payments is automated for those on IDR plans and the SAVE plan

✅ Small Business Resources 

• SBA – Small Business Administration
  https://www.sba.gov

• SCORE Mentors (Free Mentoring & Workshops)
  https://www.score.org
• Small Business Development Centers (SBDC)
  https://americassbdc.org

Are You an SBA Real Estate Loan Expert?

Test your in-depth knowledge on using SBA Loans for owner-occupied commercial Real Estate acquisition. These questions delve into the critical details that can impact your business's growth and financial strategy.

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Page 1 of 5

For an existing commercial property, what is the minimum owner-occupancy percentage required for an SBA 7(a) real estate loan, and does this specific scenario qualify?

A manufacturing company plans to acquire a 30,000 sq ft industrial real estate facility using an SBA 7(a) Loan. The company initially needs 18,000 sq ft for its operations and intends to lease out the remaining 12,000 sq ft.

A) 60%; Yes, it qualifies. B) 51%; Yes, it qualifies. C) 75%; No, it does not qualify. D) 60%; No, it does not qualify, as they are leasing out a portion.

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Which of the following sets most accurately represents additional cost categories that can typically be financed within an SBA 504 Loan for a commercial real estate project?

Hint: Beyond the straightforward purchase of a commercial real estate property, an SBA 504 Loan is highly effective for comprehensive projects.

A) Business inventory, working capital, and employee salaries. B) Building renovations, long-term machinery essential to operations within the property, and soft costs like architectural fees. C) Advertising expenses, short-term equipment leases, and utility deposits. D) Personal real estate investments, vehicles for personal use, and stock market investments.

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Between an SBA 7(a) Loan and an SBA 504 Loan, which program generally offers the lowest typical borrower down payment for a commercial real estate acquisition, and what is that common minimum percentage for established businesses?

A highly profitable professional services firm in a competitive market wants to purchase its office real estate with minimal upfront capital. The firm's owners prioritize cash flow and liquidity.

A) SBA 7(a) Loan; 15% B) SBA 504 Loan; 10% C) SBA 7(a) Loan; 5% D) SBA 504 Loan; 20%

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For new construction, what is the initial minimum owner-occupancy percentage required, and what is the maximum timeframe to meet the full owner-occupancy threshold, for an SBA Real Estate Loan?

A fast-growing tech startup plans to construct a new 50,000 sq ft headquarters using an SBA Loan. They will immediately occupy 35,000 sq ft and have a definitive plan to occupy the remaining 15,000 sq ft within two years as their team expands.

A) Initial 51%, full 80% within 5 years. B) Initial 60%, full 80% within 3 years. C) Initial 75%, full 100% within 1 year. D) Initial 51%, full 100% within 2 years.

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What is this crucial requirement, and what fundamental principle does it underscore for the lender?

When securing an SBA Loan for a commercial real estate purchase, principal owners with a 20% or greater ownership stake are almost universally required to provide a specific type of assurance beyond the collateral of the real estate itself.

A) A fixed-rate interest payment commitment, demonstrating long-term stability. B) A first-lien position on all personal assets, ensuring full recovery. C) A personal guarantee, signifying the owners' personal commitment to loan repayment. D) A business plan with projected revenue growth of at least 15% annually, showing future viability.

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To qualify, you must:

1. Work full-time for a public or not-for-profit employer in Illinois
2. Make 120 qualifying monthly payments under an IDR plan, Standard, or SAVE plan
3. Maintain Direct Loans (consolidate if needed)

✅ Real Estate Investor Resources

• AirDNA (Short-Term Rental Data)
  https://www.airdna.co

• Rentometer (Rent Comps)
  https://www.rentometer.com
• Zillow Research & Data
  https://www.zillow.com/research

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

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Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

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Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

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Fast Facts:

• As of March 2025, more than 9,500 Illinois borrowers have received full PSLF. Average amount forgiven: $72,000.
• Temporary waivers from COVID-19 have ended, but permanent reforms mean PSLF is now more accessible than ever.

3. Income-Driven Repayment (IDR) Plans: What’s New?

In addition to the SAVE plan, three other major IDR plans are available for Illinois students:

• Pay As You Earn (PAYE)
• Revised Pay As You Earn (REPAYE) (now incorporated into SAVE)
• Income-Based Repayment (IBR): Capped at 10–15% of discretionary income
• Income-Contingent Repayment (ICR): Best for Parent PLUS loans consolidated to Direct Loans

Policy Update (2025): New borrowers are automatically evaluated for IDR eligibility during the FAFSA process and can link IRS income data for seamless annual recertification.

IDR Forgiveness in 2025

If you’ve been making payments for 20 or 25 years, you may qualify for IDR loan forgiveness automatically. The IDR Account Adjustment program (extended through May 2025) counts previously ineligible periods (forbearance, certain deferments) toward IDR forgiveness.

4. Illinois Student Loan Forgiveness & Repayment Assistance Programs (2025)

Alongside federal programs, Illinois maintains several targeted relief programs for residents:

• John R. Justice Student Loan Repayment Program — Up to $10,000 for prosecutors and public defenders serving in Illinois justice system
• Illinois Teachers Loan Repayment Program — Up to $5,000, stackable with federal Teacher Loan Forgiveness, for teachers in designated shortage areas
• Illinois Nurse Educator Loan Repayment — Up to $5,000 a year for nurse educators who teach at eligible Illinois institutions
• Rural Illinois Medical Student Assistance — Physicians in underserved areas can receive up to $25,000 in forgiveness annually

See Illinois Student Assistance Commission for the latest state-level offerings and application periods.

5. Step-by-Step: How to Apply for Loan Forgiveness (2025)

For Federal Forgiveness Programs:

1. Log in to StudentAid.gov with your FSA ID
2. Check your loan types (ensure you have Direct Loans – consolidate if needed)
3. Select or update your repayment plan (e.g., SAVE, IBR, or required plan for PSLF)
4. For PSLF: Submit the PSLF Form annually to certify employment via your StudentAid.gov account
5. Track qualifying payments – the Department of Education displays real-time payment counts in 2025
6. When you reach the required number of qualifying payments, submit your final forgiveness application

For Illinois State Forgiveness/Repayment Programs:

1. Visit isac.org and the program listings
2. Download the application for your program (e.g., Teacher or Nurse Educator)
3. Prepare documentation (proof of employment, licensure, federal loan status)
4. Submit forms by deadline (typically spring/summer 2025 for 2025-26 cycle)
5. Track your application status through the ISAC portal

6. Success Stories: Forgiveness in Action

• Jessica, a Chicago Social Worker: Owed $62,000 in federal loans. After 10 years with a Cook County nonprofit, she had the balance forgiven under PSLF in 2025. Monthly payments as low as $110 under the SAVE plan.
• David, a Springfield Prosecutor: Received $7,500 in loan repayment assistance from Illinois’ John R. Justice program while also qualifying for federal PSLF, clearing over $85,000 in total debt after 11 years in public service.
• Samantha, Illinois Public School Teacher: Claimed $5,000 from the Illinois Teachers Loan Repayment Program plus $17,500 in federal Teacher Loan Forgiveness, erasing $28,000 of her $40,000 balance after five years teaching in a rural district.
• Aaron, Nurse Educator: With $120,000 in graduate loans, he utilized the Illinois Nurse Educator Loan Repayment and is on track for IDR/SAVE forgiveness in 2027.

7. Illinois Student Loan FAQs for 2025

Who is eligible for the SAVE Plan?

Anyone with federal Direct Loans (including most undergraduate, graduate, and consolidated loans). Parent PLUS borrowers must consolidate into a Direct Consolidation Loan beforehand.

Does PSLF work for private loans?

No. Only Direct federal loans are PSLF-eligible. Consider consolidation if your loans are Federal Family Education Loans (FFEL) or Perkins Loans.

Are state programs stackable with federal forgiveness?

Yes, many Illinois programs (like Teacher and Nurse forgiveness) can be used in addition to federal programs. Always check for program-specific restrictions.

What happens if my employer changes?

You can still pursue PSLF as long as you work for a qualifying employer for a minimum of 10 years, even across different organizations.

What if I miss an IDR recertification?

You may temporarily revert to the Standard plan, but you can resubmit income documentation and restore your IDR/SAVE eligibility at any time in 2025.

Summary: Take Action in 2025

Illinois borrowers in 2025 benefit from more robust federal loan forgiveness and state loan repayment programs than at any time in the past. Leverage the new SAVE plan for the lowest monthly payments, pursue PSLF if you’re a public employee, and always check for unique state opportunities to stack the most relief possible.

Need free, one-on-one help? Contact the ISACorps for personalized student loan counseling. Stay proactive, recertify on time, and track new Department of Education policy updates to maximize your student debt relief in 2025.

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