Forget goblins and zombies. For over 44 million borrowers, this Halloween there’s nothing more frightening than the next student loan bill lurking in their mailbox.

For the economic future of our nation, the cumulative threat is real and growing larger. As tuitions rise unchecked and for-profit colleges continue to prey on vulnerable students, the student loan debt burden in America is now $1.5 trillion—placing a drag on homeownership and other investments that help build a strong economy.

When you mention student loan debt to Shondra Tanner, Self-Help’s Director of Mortgage Originations, she immediately thinks of Derek and Tricia, a couple who came to us for a home loan. Tricia is a teacher, and Derek recently took on a position as assistant principal. They faithfully pay their rent on time. Together, they have enough income to handle a mortgage.  

The problem is, they both needed to take out loans to pay for their educations. A lot of loans. Currently Tricia is making student loan payments of about $1,000 a month. Derek’s payments are deferred—for now—but his payment would amount to about $1,500 a month.

“We are trying hard to help them qualify for a mortgage on a modest home,” Shondra said. “It’s not going to be easy.”

“The amount of student loan debt people have is really disturbing,” Shondra continued. “The dollar amounts we see typically range from $80,000 to $130,000. Years ago, we didn’t see these exorbitant amounts.”

Shondra Tanner, Director of Mortgage Originations

Even so, Shondra is optimistic, because Self-Help has been able to help many families who are carrying a large student debt load. Our underwriting guidelines are more flexible than many lenders’, and we work closely with first-time home buyers to structure a mortgage that works for them. For student loan holders who dream of buying a home, Shondra offers some practical advice:

Tips for Managing Student Loan Debt if You’re Struggling

• Understand your options for adjusting your student loan payments. A “deferment” means you can delay making payments, but the debt continues to pile up, and a deferment can prevent you from getting a mortgage. Loan forgiveness is great, but rare. Usually the best option is a repayment plan that is based on your specific income and your ability to repay.
• Be persistent. Getting an income-based repayment plan usually involves submitting detailed documentation to the student loan lender. Do it! It’s worth every minute of time it takes to collect and submit documents.
• If you have more than one loan, start by working on a plan with the one that has the highest interest rate.
• Be cautious about refinancing a federal loan with a private company, since you may lose access to loan forgiveness or affordable repayment options.
• If you have student loan debt and want to buy a house, try different mortgage lenders, because some are more flexible on underwriting student loans than others. (Self-Help is the more flexible type. Come to us first! :-))
• When managing your other expenses, be a tightwad! Find ways to save money that work for you. You can find resources here for money management, home-buying and more.

Our affiliate, the Center for Responsible Lending (CRL), is working with partners and allies to promote policies that will offer common-sense protections on student loans, prevent abuses that create unnecessary debt and help ease debts that hold families back and drag down the entire economy. To find out more, see research, reports and commentary on student loan debt recently released by CRL, including Congressional testimony on protecting student borrowers and specific data on student debt in North Carolina.