- ORIGINAL NEWS
New student loan repayment plan could make it easier for borrowers to become homeowners
- SUMMARY
A new repayment plan, the SAVE plan, for federal student loans has been introduced.
This plan offers several advantages to borrowers, including lower monthly payments and the potential to make it easier to achieve homeownership.
The SAVE plan cuts monthly payments in half for borrowers, allowing them to qualify for mortgages more easily.
It also raises the income exempted from payment calculations and reduces the percentage of discretionary income that must be paid towards student debt.
Additionally, the smaller monthly payments under the SAVE plan can enable borrowers to save more money toward a down payment for a home.
However, some mortgage lenders may not count a $0 monthly student loan payment in their underwriting process, which could still impact a borrower’s ability to qualify for a mortgage.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“The Biden administration officially rolled out “the most affordable repayment plan yet” over the summer.”
“borrowers will be required to pay just 5% of their discretionary income.”
“Kantrowitz provided some examples of how much borrowers could see their bills drop.”
Negative
“In the past, most mortgage lenders assumed that a borrower’s monthly student loan payment was a certain percentage of their loan balance, even if the actual payment was lower, Kantrowitz said.”
“By not counting their monthly payments as $0 in the underwriting process, lenders are artificially inflating consumers’ monthly debt obligation,” Bamona said.”