Customers with damaged credit could impact brokers across the industry
One of the biggest credit stories of 2025 has been the resumption of student loan payments after lengthy pauses that started during the COVID-19 pandemic.
Unfortunately, many borrowers who now have a student loan payment added to their budgets are struggling to keep up. This is causing soaring student loan delinquencies, which first impacted the consumer loan market. Now, they’re creeping toward the commercial real estate (CRE) market.
Renters who are falling behind on student loan payments are struggling to make rent payments or even qualify as tenants. This could start to put pressure on occupancy in both single-family and multifamily rental properties.
These delinquencies can also hurt both CRE brokers and conventional mortgage brokers, who hope to help these renters eventually buy their own homes and leave renting behind.
TransUnion investigated the ties between student loan delinquencies and renter struggles. Maitri Johnson (pictured top), EVP of TransUnion's tenant and employment screening business, said landlords will have to start considering student loan payments in qualification standards.
“This is exactly why we encourage landlords to take another look at the role student loan debt plays in the approval and underwriting process,” Johnson told Mortgage Professional America. “Deal loans are underwritten at certain pro forma levels, including occupancy levels. Not paying enough attention to this emerging consumer trend may have a negative impact on pro forma performance.”
Credit scores plunging
According to a TransUnion report, over 2.2 million borrowers saw their credit scores drop by 100 points or more in just a few months. One in three borrowers making payments is now more than 90 days past due, and one in five has stopped paying altogether.
Johnson said that, even though they knew there would be some challenges in the sector, they were still surprised by the extent of those challenges.
“While we knew the results were going to be indicative of some financial stress with some borrowers, the magnitude of the stress was certainly surprising and very concerning,” Johnson said. “A third of the consumers carrying student loans are 90+ days delinquent. The adverse impact of this payment pattern is significant, affecting credit scores by as much as 100 points.”
Among renters, 63% who had credit scores in what they consider “near prime” – a range between 601 and 660 – fell into subprime. It also impacted high-credit borrowers. For those in the “super prime” range between 781 and 850, 51% saw their score drop to “prime” between 661 and 720, and 45% fell to “near prime.”
This is why Johnson is emphasizing to landlords to be mindful of qualification standards.
“In the same way landlords adjusted screening policies during the foreclosure crisis, we anticipate and encourage landlords to reevaluate how student loan debt is treated in the approval and underwriting process,” Johnson said. “For example, evaluating the balance owed, the age of the student loan, and prior payment history on the loan may all be considerations in this reevaluation.
“Of course, this is not legal advice, and we encourage property managers and landlords to work with their counsel to determine how best to manage this.”
Mortgage brokers who work in the commercial space, especially in single-family and multifamily rental properties, will also need to keep a close eye on their loan customers to make sure they’re properly vetting tenants. Otherwise, commercial delinquency could also start to rise as landlords are unable to make their loan payments.
Potential fraud risks
Because of the growing financial stress, Johnson said there is concern that fraud could surge due to these problems. Both landlords and brokers need to be on the lookout for increased fraud, especially created by artificial intelligence.
“Many fraud solutions in rental housing today are solving first-party fraud, such as fake documents, stolen PII (personally identifiable information),” she said. “What is not being solved is synthetic fraud, which is the fastest-growing type of fraud and exacerbated by AI.”
Another challenge this could pose for brokers is that many renters hope to buy their own home eventually. However, if they’re getting behind on finances due to loan delinquencies, they may not be in a position to qualify.
MBA's Mike Fratantoni emphasizes that while first-time buyer age remains stable at around 33, affordability remains a major hurdle. Buyers are leveraging FHA loans, ARMs, and relocating to lower-cost regions to achieve homeownership. https://t.co/Caudrjl7bC
— Mortgage Professional America Magazine (@MPAMagazineUS) December 9, 2025
While brokers can start by reaching out to these renters to advise them on their credit decisions, Johnson said the first step is for renters to receive credit for rent payments, which can help them eventually get their own home.
“This is where the role of rent payment reporting plays a crucial role,” Johnson said. “By reporting rent payments that appear on consumer credit reports, (landlords) are helping residents who may be strapped with this student loan debt to regain their financial footing, which allows them to stay on track to realize their dream of homeownership.”
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