Mortgage Help for Debt-Saddled Grads
New rules make it easier to qualify for a home loan or to use a refi to pay off college debt.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter

Today’s college grads leave school with an average of $34,000 in student-loan debt. That mound of debt is delaying homeownership among millennials. Parents and grandparents who cosigned private student loans or took out Parent PLUS loans may also be burdened. Now, mortgage giant Fannie Mae has launched loan-underwriting changes that will lighten the load.
When calculating a borrower’s monthly debt-to-income ratio, lenders will exclude payments made in the past year by someone else—typically a parent or employer—for nonmortgage debt, including student loans. And for those on an income-adjusted repayment plan, lenders will use the lower payment on a federally insured loan instead of the higher, fully amortized payment of principal and interest.
A third initiative allows homeowners to refinance their mortgage, taking cash out to disburse directly to a student-loan lender to pay off debt. That will also help parents or grandparents who borrowed to help the kids and now want to refinance. The new Student Loan Cash-Out Refinance loan can’t exceed 80% of the current market value of the home. For example, refinancing a $175,000 mortgage, lowering the rate from 4% to 3.75% and rolling in $25,000 in student loans would save borrowers about $80 a month.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Refinancers will lose some student-loan protections, including income-based repayment and deferment on federal loans. You’ll lose any student-loan interest deductions for which you may have been eligible, but you’ll gain a larger mortgage-interest deduction if you itemize on your tax return.
-
-
When Is the Next Fed Meeting?
Investors, savers and consumers can expect another interest rate hike at the next Fed meeting.
By Dan Burrows • Published
-
Need an Estate Planning Checkup? Now Is the Perfect Time
An appointment with your estate planning attorney can address any holes that have developed and ensure everything is in place.
By Jack R. Hales Jr., J.D. • Published
-
The 25 Cheapest Places to Live: U.S. Cities Edition
places to live Take a look at our list of the cheapest places to live in America for city dwellers. Is one of the cheapest places to live in the U.S. right for you?
By Dan Burrows • Published
-
Best Cash Back Credit Cards January 2023
Smart Buying Looking for the credit card that pays the most cash back? These lenders may pay hundreds of dollars, with minimum hassle.
By Lisa Gerstner • Last updated
-
I-Bond Rate Is 6.89% for Next Six Months
Investing for Income If you missed out on the opportunity to buy I-bonds at their recent high, don’t despair. The new rate is still good, and even has a little sweetener built in.
By David Muhlbaum • Last updated
-
What Are I-Bonds?
savings bonds Inflation has made Series I savings bonds enormously popular with risk-averse investors. How do they work?
By Lisa Gerstner • Last updated
-
Your Guide to Open Enrollment 2023
Employee Benefits Health care costs continue to climb, but subsidies will make some plans more affordable.
By Rivan V. Stinson • Published
-
Watch Out for Flood-Damaged Cars from Hurricane Ian
Buying & Leasing a Car In the wake of Hurricane Ian, more flood-damaged cars may hit the market. Car prices may rise further because of increased demand as well.
By Bob Niedt • Last updated
-
What You Need to Know About Life Insurance Settlements
life insurance If your life insurance payments don’t seem worth it anymore, consider these options for keeping the value.
By David Rodeck • Published
-
Best Travel Rewards Credit Cards January 2023
credit cards Business road warriors and leisure travelers can use travel rewards credit cards to turn miles logged into other things — including more travel.
By Lisa Gerstner • Last updated