As the government shutdown reaches the end of its second week, some student loan borrowers are saying they plan to skip their next payment.
Although some borrowers don’t mind the credit ding, real estate professionals are urging borrowers who want to purchase a home this fall to keep paying— or risk derailing their homeownership journey for another year.
“Doesn’t matter if you were 30 days late or 60 days. Doesn’t matter if the amount was $50 or $5,000. Every day, every dollar, is on record,” certified financial planner Eric Croak told Realtor.com on Monday. “Mortgage lenders will typically expect to see 12 months of clean payment history before approving a conventional loan with the best rates or terms.”
“So if you’re eyeing homeownership as something you’ll get to next year, don’t let student loan delinquency become a factor in your plans,” he added.
In the days leading to the shutdown, the Department of Education filed a contingency plan with the Office of Management and Budget (OMB) that outlined the steps for disbursing student aid and grants from programs with mandatory funding. In the plan, the Department said borrowers are “required to make payments on their outstanding student debt” throughout the shutdown.
Protect Borrowers Managing Counsel Persis Yu told CBS News that borrowers should brace themselves for slow service, as the Department of Education has fired roughly 20 percent of its staff.
“If things go wrong with their servicer, which they often do, borrowers are going to have fewer people to turn to to get those errors resolved,” Yu said.
Student loans have long been a hindrance for homebuyers, who need to maintain a front-end debt-to-income ratio (DTI) of less than 36 percent and a back-end DTI ratio of less than 43 percent to qualify for a conventional loan (Maximums vary based on loan type and whether underwriting is automatic or manual).
A January 2025 report from The Education Data Initiative stated that homeownership among recent college graduates has declined by 1.8 percent for every $1,000 of student loan debt since 2005, with 37 percent of homebuyers reporting student loan debt.
First-time homebuyers with student loan debt spend an average of 39 percent less on their homes than buyers without student debt, the report said.
The Trump Administration said it plans to forgive loans for borrowers on Income-Driven Repayment (IDR) plans who’ve made 25 years of on-time payments. Realtor.com said roughly 2 million borrowers are on an IDR plan, and those who are eligible for forgiveness will receive email notices in the coming weeks.
If a buyer doesn’t qualify for forgiveness and cannot keep up with payments, Croak said not all is lost.
“A student loan will ding your score, but it’s generally weighted a bit less, especially a federal loan,” he told the portal.
