As of October 2023, student loan payments have resumed and could affect your ability to buy a house.
I talk with loan officer, Miles Pitcher, owner of Superior Lending, about your options now that student loans can affect your credit score as well as potential dangers to avoid.
What is the student loan payment pause?
For the last three and half years, student loan repayments were paused due to the COVID-19 pandemic. This means your credit wasn’t affected from missed payments and interest no longer accrued.
How does student debt affect buying a home?
Now that student loan payments are due, missing a payment will put your account into delinquency. After 90 days of delinquency, your student loan account will go into default and put on a “black list” called CAIVRS (CREDIT ALERT INTERACTIVE VOICE RESPONSE SYSTEM).
Loan officers use CAIVRS to determine if you’re eligible for a mortgage loan.
Student Loan Stats
- There is $1.7 trillion in student debt nationally.
- Student loan debt is the 2nd largest debt in the USA (mortgage is 1st).
- Utah has the lowest average student debt at $18,000.
- Since 2020, the student loan debt balance has increased by $165 billion.
- The national average student debt is $39,000.
- Attorneys and lawyers are most likely to default on their student loans.
What if I can’t pay my student loan?
If you’re having trouble paying your student loan you may qualify for an income based repayment program. This program is issued through your federal student loan servicer, and it could help by lowering the amount you pay per month or maybe pause payments. It’s a year to year program so you will need to apply every year.
To see if you qualify, go to https://www.myloansense.com/c/miles-pitcher – a free/no spam service provided by Superior Lending.
Dangers to avoid
Be aware of private student loan companies pushing you to consolidate your student loan debt. Once you do this you no longer qualify for the income driven repayment plan.
Most IDR plans have a debt forgiveness period after 20 0r 25 years.
Please reach out if you have any questions.
Thank you Miles Pitcher for your time.