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New student loan payment plan may help borrowers become homeowners [Video]

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A row of townhouses in Alexandria, Virginia.

Grace Cary | Moment | Getty Images

A new, more affordable repayment plan for federal student loan borrowers may come with another advantage: It could make it easier to become a homeowner.

The Saving on a Valuable Education, or SAVE plan, can cut borrowers’ monthly payments in half, and leave many people with a $0 bill. The Biden administration officially rolled out “the most affordable repayment plan yet” over the summer.

“Switching to a repayment plan that has a lower monthly payment can help a borrower qualify for a mortgage,” said higher education expert Mark Kantrowitz.

Half of student loan borrowers — including 60% of millennial borrowers — who haven’t yet purchased a home say their education debt is delaying them from doing so, according to a 2021 report by the National Association of Realtors.

Here’s how the SAVE plan could soon change that, experts say.

Smaller payments can help prospective homebuyers

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