There has been an upward trend in educational borrowing over the past several decades, according to the Federal Reserve, to the point where four in every 10 people who attended college incurred at least some debt to pay for their schooling. Of those, 20 percent still owe money, some more than $100,000.

For many borrowers, student debt has delayed their ability to buy a house. But for others, their debt has all but prevented them from joining the ranks of home owners. Still, a study by First American economist Sam Williamson finds that Millennials, the most educated population cohort ever, are “well positioned” to drive housing demand going forward.

How is that? Largely because folks with college diplomas far out-earn those who only graduated high school. The typical inflation-adjusted income for young households with student debt increased from $73,000 to $122,000 between 1992 and 2022, Williamson’s research discovered. Among Millennials, he found the gap in house-buying power between those with a high school diploma (or some college/associate degree) and those with a bachelor’s degree was roughly an inflation-adjusted $250,000.

Couple that with longer student loan terms — the average loan repayment term nearly doubled from 7.5 years in 1992 to 13.9 years in 2022 — and lower interest rates — the average annual rate fell 2 points, from nearly 8 percent in 1992 to right around 6 percent in 2022 — and you find the reason why, in ’22, the ownership rate among Millennials with a bachelor’s degree was almost 13 percent higher than those who just finished the 12^th grade. 

But that still leaves millions of people carrying sometimes insurmountable education loans. Of the 43 million Americans with student loans, roughly 17 million are in their prime home buying years, according to the Education Data Initiative. But 51 percent of those who rent say their education loans have kept them from purchasing a house.

There are ways to make student debt go away, though, or at least make it so that it will no longer stand in the way of qualifying for financing. It’s a safe bet, however, that the Biden Administration’s somewhat controversial Plan B initiative to cancel education loans altogether won’t be one of them.

For one thing, Plan B has been blocked by the Eighth Circuit Court of Appeals in Missouri so that legal challenges by Republican-led states can proceed. And with Donald Trump back in the White House, it’s likely that Plan B has seen better days.

Still, there are other programs on the books to help people saddled with student loans, both public and private. One option allows a parent to take over the student’s loan, possibly in the parent’s name. Or the parent can “unofficially” become the borrower by making 12 consecutive payments on the student’s behalf. Once that benchmark is achieved, the student’s all-important debt-to-income ratio will fall. So, if Mom and Dad don’t have enough cash on hand to take the load off their son or daughter by paying off the kid’s loan (or loans) completely — or providing some help with the downpayment — they can take over the student loan payments, thereby eliminating that roadblock to qualifying for a mortgage.

There are several federal education loan relief programs on the books as well. And until Congress says otherwise, they will remain there, even under a dubious Trump Administration. One plan is income driven, another is for public service workers, and a third is for people with medical impairments. Better yet, according to a recent Consumer Financial Protection Bureau survey, one in 10 people who applied for relief were successful in having the debt discharged, cancelled or forgiven.

You and your borrowers can access information about ways to accomplish that feat and apply for relief at www.studentaid.gov. But the info and applications are so full of legalese you might want to send your clients to the experts who work every day with would-be homebuyers who want to obtain funding.

People like Cat Kaiyoonawongs of LoanSense, who works with people who have government-backed student loans, and Sara Parrish of CampusDoor, who works with folks with private education loans. About 93 percent of all student loans are federal; the rest are private.

For starters, don’t give up. Don’t close the file on would-be borrowers just because they are carrying a heavy student debt load. About 37 percent of all first-time buyers have student loans, the Education Initiative reports, so there is a way.

People who work with LoanSense, which deals directly with consumers as well as through mortgage lenders, have lowered their payments from $350 to $650 a month, says Kaiyoonawongs. And in the process, she adds, they have raised their home-buying budgets by $50,000 to $80,000, on average.

One way to accomplish that is to consolidate loans. While the average balance of a student debt borrower is $29,400, those CampusDoor sees typically have three separate loans with a total average balance of $64,000, Parrish reports. And some people have more loans than that.

By combining all these loans into one, your clients could trim their overall interest rate, at least early on, and increase their consolidated loan’s term up to 30 years. Together, the monthly payment on the combined loans could be low enough that they will be able to qualify for a mortgage.

Another possibility is the Income-Based Repayment plan, which expressly allows for federal loan forgiveness after 20 or 25 years of regular on-time payments. Sometimes called the Income-Contingent Repayment plan, it bases your payment on your income and the size of your family.

To qualify, borrowers need to first consolidate all their student loans and then certify their earnings and family sizes. Borrowers will have to re-certify annually, but the payment plan could be low enough that they qualify to buy a house. Better yet, after 25 years, Uncle Sam will forgive whatever balance is left, which is most people’s objective, says Kaiyoonawongs.

Public servants — anyone who worked for local, state or federal government; worked at a non-profit organization; and now those serving in the Peace Corps, AmeriCorps and the military — may be eligible to have their loan balances forgiven if they have worked or served full-time for 10 or more years.

To qualify, you must have made a total of 120 qualifying monthly payments under a federal income-driven repayment plan. The payments need not be consecutive, and neither does the time worked as a public servant.

Extended and graduated repayment plans are also an option. The extended plan pushes payments out to 25 years, thereby decreasing your client’s monthly nut. His balance will not be forgiven, though.

With a graduated plan, the monthly payment starts low and then increases every two years. If several loans are consolidated under this choice, your borrower can have up to 30 years to pay off his debt. That makes this a good choice if the borrower expects his income to grow and keep growing.

People with total and permanent disabilities who are unable to work are eligible to have their student loans discharged. Moreover, the forgiven amount is tax free, at least for now. That provision is up for renewal this year.

Finally, if your client believes his school misrepresented or made false promises about its degree or certification program, he may be able to apply to have his student debt balance discharged. Currently, though, the rules regarding this Borrower Defense program are tied up in court.

For those with private education loans, the options are far greater and more varied. Parrish says her company, which works through lenders and does not deal directly with consumers, supports more than 1,600 unique programs offered by dozens of lenders who have assisted more than 2.2 million borrowers along the way.

But the various plans are essentially unique to each individual lender. Consequently, CampusDoor is a specialty business whose platform is embedded solely into lenders’ websites.