5 Ways Student Loan Debt Is Slowing Down Gen Z -- and What They Can Do About It
A new Gallup poll has revealed a shocking, sobering fact about Gen Z: Roughly 67% (or two-thirds) of the generation born between the years 1997 and 2012 have postponed one or more major life milestones because of crippling student loan debt.
As reported by Axios, America’s student loan debt is exploding. Currently, Americans owe over $1 trillion in student debts, and now that the COVID-era pause on loan payments is over and the threat of wage garnishment hangs over those who don’t pay, many in Gen Z are delaying major life moments in order to afford their loan repayments.
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Specifically, according to the Gallup and Lumina Foundation poll, Gen Z’s most commonly delayed life events are as follows:
Buying a home
Going back to school
Buying cars
Getting married
As a result, the lives that so many in Gen Z were hoping to build with a college education are becoming delayed because of that college education.
If you have found yourself saddled with a crushing amount of student debt, don’t give up on your life plans just yet. There are ways to stay on track.
What Can Gen Z Do To Get Back on Track?
Recently, MoneyLion consulted with Cody Schuiteboer, president and CEO of Best Interest Financial, to find out how Gen Z can best combat student loan debt and keep their lives on schedule—especially as it pertains to buying a home. What he suggested might surprise you.
“One does not need to be debt-free to start a life,” Schuiteboer insisted.
“I approve home loans for borrowers with student loans on a monthly basis,” he said. “People have one big misconception about student loans. Young borrowers assume having $40,000 or $80,000 means you won’t qualify for a mortgage, but that is not true. While underwriting, I look at your total debt not as a huge number. I take your total loans and look at your total debt to income (DTI). A borrower with $80,000 of student loans with a monthly payment of $250 looks much better than a borrower with $15,000 of credit card debt with a minimum payment of $1,000.”
Schuiteboer made clear that you should not focus so much upon what you owe, but how much your monthly payment is in relation to the DTI. Most programs keep DTI to 43%, while some FHA loans go to the mid-50s, and conventional loans fall between 45% and 50%.
He added that a new 2026 rule is going to be a game-changer for Gen Z, and most borrowers don’t know about it yet.
“Loans through Fannie Mae are what most young borrowers will get first, and they will count your income driven repayment, as it is listed on your credit, even if it is only a few hundred dollars,” he explained. “This is great for borrowers with a big student loan balance, but a small monthly student loan payment. Most mortgages count the payment that has to be paid against your DTI, but if you change from the 10-year repayment to an income-driven repayment plan, it will immediately increase your DTI and repayment room. Just document it, and follow the current federal guidelines. These programs are frequently changing and are in constant litigation.”
Finally, Schuiteboer suggested that the fastest way most young buyers can improve their mortgage odds is to eliminate their credit card debt first, not student loan debt.
“Pay the minimum on a student loan and save for a down payment and build credit and save at the same time,” he insisted. “The borrowers who delay the longest aren't the ones with the most debt. They're the ones who believed they had to be at zero before they could begin. Don't pause your life while waiting to be debt free.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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