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Three missed student loan payments was all it took for Jacob Naig’s clients to lose a home loan pre-approval and have to put their dreams of buying on hold. Like many homebuyers shut out of the market, they downsized to a rental to focus on rebuilding their credit.
But for some, the squeeze doesn’t stop there. The same credit score drop that tanked Naig’s client’s mortgage approval could have kept them from getting the apartment, too.
“Even one or two months of short-term delinquencies can drop credit scores by 20 to 50 points—enough to make the difference between qualifying for a competitive lease as a renter and favorable terms on a mortgage as a buyer,” says Naig, a real estate investor and agent based in Des Moines, IA.
Since the federal government resumed reporting student loan delinquencies to credit bureaus in October 2024, ending the COVID-19 pandemic-era pause, these scenarios have become more common. In the second quarter of 2025, nearly 1 in 5 borrowers aged 50 and older was seriously delinquent, more than double the pre-pandemic rate, according to the Federal Reserve Bank of New York.
While the risk to homeownership is well understood, student loan delinquency is also a growing risk for renters. In some markets, landlords are now factoring student loan repayment status into rental applications, with credit checks remaining a standard screening tool.
How landlords are responding to the credit score slide
The math can turn against renters with student loans fast. One missed payment can send a credit score tumbling. Two or three, and the damage can follow them straight to a rental application.
“When a borrower’s credit score takes a hit from missed payments … it can also make it harder to secure a rental since most landlords run credit checks,” says Yancy Forsythe, a real estate professional at Missouri Valley Homes.
Some property managers are going even further.
“I know of one property manager who has begun to ask applicants for rental accommodation to disclose their student loan repayment status—not as a disqualifier, but as part of the underwriting process to assess the risk that they will vacate or miss payments.”
The question alone signals a new awareness in the rental market. While federal student loans used to widely be seen as “safe debt” because of generous repayment and forgiveness options and low interest rates, they’re now becoming an active part of the risk calculation for some landlords.
The SAVE divide: Breathing room for some, a trap for others
For borrowers struggling with loan repayment, the Biden-era SAVE plan was supposed to be a lifeline: lower monthly payments, a shorter path to forgiveness, and a break from compounding interest.
But that break ended earlier this month, when the Department of Education resumed charging interest to SAVE borrowers after a yearlong pause, following a court order that blocked the plan in July 2024.
Eight million borrowers who had been in interest-free forbearance now face growing balances again. President Donald Trump’s Education Department is urging them to switch to other repayment options, but processing backlogs with as many as 1.5 million pending applications means the transition will take time.
“SAVE [gave] renters a bit of monthly breathing room, sure, but it is more of a bandage than a bridge. I have watched budgets free up by $150 to $400 a month depending on the repayment cap, but the issue is that most people do not actually allocate that freed-up cash,” says Eric Croak, an Ohio-based Certified Financial Planner.
For some, that extra cash has gone toward lifestyle upgrades that could be hard to sustain if payments spike.
“People hoping and believing their student loans would be forgiven started taking on debt they could not afford when the reality of student loans not going away hit home,” says Todd J. Drowlette, a veteran commercial real estate investor.
The danger now is clear: Renters who budgeted around SAVE’s lower payments might face a double hit from growing balances and shrinking repayment options.
The long road back for delinquent borrowers
Falling behind on student loans is more than a short-term setback. It could be the beginning of a yearslong climb out of the hole.
Borrowers who miss payments “will spend years in credit recovery mode, pushing out the time they remain renting and maintaining pressure on middle-tier rental stock,” says Naig.
For those who slip into default, the damage can spill over into the rental market itself.
“If the default rates climb, it could also create a class of renters who struggle to qualify even for rentals,” says Forsythe.
And for many, the goal of homeownership will have to wait.
“People will push off homeownership until they feel more financially stable. They will also be relying heavily on credit cards to float payments unless they have parents/family members willing to help them pay current obligations,” adds Drowlette.
The result is a pipeline problem. In high-cost metros, fewer first-time buyers moving into the market means more rental competition (and higher rents) for the limited number of affordable units.
Those able to maintain good standing on their loans can keep moving toward ownership, but for others, the road back is long and crowded.
What renters can do right now
The priority for renters with student loan debt is simple: Stay current on payments to avoid the credit-score damage that can derail a rental application and trigger collections.
If you were on SAVE, assume your repayment terms are in flux: Interest has resumed, switching plans may face processing backlogs, and by July 2028, the system consolidates into fewer, less generous options. If you plan to change plans, start paperwork early to avoid gaps that can lead to delinquency.
Use any room in your budget—however you create it—to build a savings buffer. It can absorb unexpected expenses if they pop up, so you can stay current with your payments.
On the housing side, prepare your rental file. Know your credit, gather proof of on-time rent and income, and understand how your landlord screens (credit checks, payment history, and—per some managers—student loan repayment status). The more you can document stability, the better your odds in competitive markets.