Many have wondered why borrowers can’t refinance their student loan debt. In fact, this question is so common that recently it was brought to Capital Hill by a group of concerned REALTORS®.
As you are probably aware, refinancing the mortgage on a home can help homeowners in dire financial trouble stay in their homes rather than losing them to foreclosure. This begs the question, why can’t those who are paying back debt on their student loans do the same.
Additionally, extending the ability for student loan borrowers to refinance their debt could open up the opportunity of home ownership to many who would have previously been excluded. This ability could allow certain borrowers to qualify for mortgage loans that would have previously been out of their reach. With this in mind, the National Association of Realtors recently backed a piece of legislation called the “The Bank on Students Emergency Loan Refinancing Act”. Additionally, the legislation would make changes in the underwriting process and ensure that loan applicants were not penalized unfairly for having student loan debt.
The NAR’s involvement in the issue is well-timed as student loan debt is at an all time peak. Seventy percent of students walk away from college with debt. Additionally, many older consumers are burdened by student loan debt that they have accumulated on behalf of their children or are still paying of their own loans.