Student debt can make it harder to rent an apartment
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If you’ve fallen behind on your student loans, it may be more challenging to get a property manager to approve you for rental housing, financial experts say.
“Delinquency is a bad sign for creditworthiness, and landlords may choose not to rent to potential tenants who are having a hard time paying off their student debt,” said Joel Berner, a senior economist at Realtor.com.
Many people may be running into that scenario. The number of rental applicants who were more than 90 days delinquent on their education debt more than doubled, from 15% in January to 32% in May, according to a new analysis from TransUnion, a credit rating company. Separately, 45% of federal student loan borrowers say their debt has negatively impacted their housing plans, according to research published this month from The Institute for College Access & Success, a nonprofit that advocates for college affordability.
More than 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion.
Student loan borrowers have been under pressure from a weakening labor market, a barrage of changes to the lending system and recent trouble accessing relief programs under the Trump administration. More than 5 million borrowers are currently in default, and that total could swell to roughly 10 million borrowers soon, the Department of Education said earlier this year.
Behind on your student loans and looking for a rental? Financial experts shared these five tips.
1. Show you’re resolving the delinquency or default
The best thing a past-due student loan borrower looking for new housing can do is move to resolve the delinquency or default, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate repayment.
Your student loan servicer will report you as delinquent to the national credit rating companies after roughly 90 days, and borrowers are typically considered to be in default when they haven’t made a payment in at least 270 days.
Borrowers can often get out of a delinquency status by making a payment on their student debt or enrolling in a forbearance, Mayotte said. There are also economic hardship and unemployment deferments available for those who qualify, both of which keep your loan payments paused and out of the red. Those who are further behind can contact the government’s Default Resolution Group and sign up for a loan rehabilitation or loan consolidation.
These processes might take time — especially for those in default — but it can be helpful to show a prospective landlord that you’ve taken steps to get current on your payments, Mayotte said.
“They can try and provide proof they are enrolled in those programs and include information as to how the programs put them back in good standing,” Mayotte…
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