Two US Representatives introduced legislation to give student loan borrowers a better shot at becoming homeowners. Democratic Reps. Gregory Meeks of New York and Nikema Williams of Georgia introduced the Making FHA Work for Borrowers with Student Debt Act of 2021 on Monday (June 14), which would require the Federal Housing Administration (FHA) to treat student loan borrowers “more fairly.”
“This bill requires the...FHA… to more fairly treat student loan borrowers looking to obtain an affordable mortgage through FHA’s insurance program,” a press release said. “The bill achieves this goal by reforming FHA’s guidelines so that student borrowers –– particularly those enrolled in repayment programs that lower their monthly obligations –– are judged on their capacity to repay a mortgage based on what they actually pay in student loans monthly.”
Under current rules, the FHA doesn’t include a potential homeowner’s active participation in an income-driven repayment plan when calculating their debt, “constricting access to an FHA loan for many low-to-moderate income individuals.”
The process now “disqualifies home-ready borrowers from a program that generally promotes homeownership,” Rep. Meeks said. “Under the current system, many young people, especially those young people of color, miss out on one of the greatest wealth building opportunities because they pursued higher education,” he added.
A recent report found that Black women carry higher rates of student debt compared to other groups, furthering racial inequality in wealth and homeownership as a result. Rep. Williams said this legislation is necessary “to close the wealth gap.” “Young adults need to have the chance to buy a home and make other investments in their future,” Williams added.
On Wednesday (June 16), the Biden administration announced it would be cancelling $500 million in student loans for 18,000 borrowers after initially leaving student loan forgiveness out of his budget.