Student Loan Reporting Is Back, And It’s Hurting First-Time Homebuyers
*FIRST-TIME HOMEBUYER SERIES*
In early 2025, the federal government ended a key protection previously enforced by the Consumer Financial Protection Bureau (CFPB), allowing student loan delinquencies to once again appear on credit reports. This change, part of a broader shift in consumer oversight policy, has had immediate and serious consequences for millions of borrowers,especially those hoping to buy their first home.
During the pandemic, missed federal student loan payments were not reported to credit bureaus, shielding borrowers from negative credit impacts. But with the resumption of student loan collections and a rollback of these protections, credit scores are once again reflecting missed payments, and the results are sobering.
According to the Federal Reserve Bank of New York, nearly 9 million borrowers are expected to see drops of up to 150 points in their credit scores due to delinquencies. Already, 2.2 million borrowers have lost more than 100 points, and 1 million have lost over 150 points. These sharp declines are more than just numbers—they’re barriers to homeownership.
🏠 The Impact on First-Time Homebuyers
Credit scores play a major role in determining a buyer’s mortgage options. When scores drop:
Buyers may no longer qualify for conventional loans, forcing them into more restrictive or expensive financing, such as FHA loans.
Interest rates go up, meaning higher monthly payments and long-term costs.
Mortgage approvals can be delayed or denied, just when buyers are ready to act.
Adding to the pressure, the CFPB has deprioritized student loan oversight, making it harder for borrowers to dispute inaccurate reporting or get the support they need.
🔎 What Buyers Should Do Now
If you’re planning to buy a home and carry student loan debt, here’s how to protect yourself:
Resume and automate your payments. Autopay helps you stay current and rebuild your credit.
Check your credit regularly. Stay alert for errors and act quickly to correct them.
Work with a mortgage professional. A good broker can help you explore your best options—even with damaged credit.
Be realistic about your timeline. If your credit took a hit, it may be worth waiting a few months to improve your score before buying.
💡 The Takeaway
Student loan delinquencies are once again affecting credit scores, and the housing market is feeling the ripple effects. For first-time homebuyers, especially those already burdened with debt, this can mean higher costs, limited choices, and missed opportunities.
But knowledge is power. With the right strategy, and the right support you can still make your homeownership goals a reality. Stay informed, stay proactive, and don’t hesitate to ask for expert guidance as the lending landscape continues to shift.
