Student Loans Are Delaying Homeownership by 10 Years for 1 in 4 Grads—and 2026 Repayment Changes May Push It Further

More than a quarter (27%) of college graduates with student loans say their debt delayed homeownership by an average of 10 years, according to a new survey. And now, with a sweeping overhaul of federal repayment options scheduled to begin on July 1, 2026, student-loan advocates warn the lost decade could stretch even further for borrowers whose required payments rise, or whose repayment terms become harder to predict.

It’s a steep trade-off at a moment when many borrowers already question whether college paid off for them. A survey from Nexford University found that 1 in 3 graduates reported that their degree did not improve their financial situation. At the same time, the Trump administration’s Education Department is expected to begin ramping up involuntary collections on defaulted federal loans with wage garnishment, adding new financial pressure for borrowers who are behind.

Nexford surveyed 1,011 U.S. adults with college degrees in November 2025 to compare education outcomes with real-world financial milestones. The findings point to a shaky runway from graduation to stability. Graduates overestimated their starting salaries by an average of 33%, or $17,000.

For the roughly 42.5 million Americans with federal student debt, the question now is whether the next phase of repayment policy will lengthen their runway to homeownership, pushing first-time buyers even further into the future.

Why student debt delays homeownership in real life

Student debt can shape a borrower’s balance sheet for decades. One widely cited analysis finds repayment often stretches close to 20 years, and the average federal borrower owes about $39,000. Separately, estimates of what borrowers pay each month vary by dataset and cohort, but a common benchmark puts the typical payment in the range of $500 per month.

With that kind of recurring obligation, the homeownership math gets tight fast. First is the straightforward cash-flow squeeze: Every dollar that has to go to a loan servicer is a dollar not going to a down payment, closing costs, or an emergency fund.

Then comes the debt-to-income (DTI) ratio, the underwriting gatekeeper. A required student loan payment can reduce the mortgage amount buyers qualify for, or push them out of eligibility altogether, especially in higher-rate environments.

For example, consider a borrower making $65,000 a year—the average starting salary for someone with a bachelor’s degree. If they’re paying $500 a month toward student loans, $540 for a used car (the national average for a used car), $850 in rent (assuming they split the national median asking rent with a roommate), and $150 toward credit card debt (the average monthly payment), their total monthly obligations would bring their DTI to about 38%.

That’s just above the 36% threshold many lenders consider optimal for mortgage approval, and that’s before factoring in any savings needed for a down payment, closing costs, or emergency reserves.

In this regard, assuming the 50/30/20 rule—which suggests using 50% of your take-home pay for needs, 30% for wants, and 20% for savings and paying off debt—this borrower would be able to save only $190 a month for their down payment, or just under $2,300 a year, slowing their progress considerably. 

And for borrowers who fell behind, there’s a third constraint: credit damage and collections. Delinquencies can tank a credit score, and for borrowers who default, the federal government can resume involuntary collections, including wage garnishment in a direct hit to both creditworthiness and the ability to save.

Where this is already showing up

Millennials offer a clear example of how student debt, layered on top of stagnant wages and record-breaking home prices, has reshaped the path to homeownership. And their experience is increasingly seen as a bellwether for Gen Z and Gen Alpha buyers to come.

More than half of millennials (53%) have been saving for a home for at least five years, yet still haven’t reached a down payment, according to a survey from Clever. A key reason is that debt outweighs savings for many: Nearly 1 in 4 millennials (24%) has more debt than savings, and 75% are still carrying some form of nonmortgage debt.

Even those who do reach the finish line face new hurdles. About 1 in 5 millennials say they’re worried they won’t qualify for a mortgage due to their debt load, and nearly the same share say they’re concerned they won’t be able to afford the mortgage once they do.

What’s changing in repayment plans (the 2026 shift)

To make matters harder for those burdened by student debt, major changes to federal loan repayment programs set to go into effect this summer could change their monthly debt obligations.

For one, new borrowers' repayment plan options will shrink from 6 to 2 core options: a revamped standard plan (with the payoff term tied to balance size) and a new income-based option called the Repayment Assistance Plan (RAP), which is designed to be the main income-driven track going forward.

Existing borrowers will, for the most part, be able to keep access to some legacy income-based plans if they don’t take new loans after July 1, 2026, but they may need to make an affirmative choice by mid-2028—and borrowers who miss the transition window can be moved automatically into RAP (with some loan types excluded from RAP eligibility).

However, income-contingent repayment plans like the ICR and PAYE are scheduled to be discontinued by July 1, 2028. Borrowers on these plans will need to make a switch, potentially raising their monthly payment.

Things are especially uncertain for the 7 million-plus borrowers on the SAVE plan, which had offered the lowest monthly payments. The SAVE plan remains tied up in litigation and a proposed settlement that, if approved, could require millions of borrowers to switch plans during 2026. But until borrowers see final rules, servicer guidance, and clearer payment estimates, it’s harder to plan for a mortgage timeline because the “required monthly payment” piece of the equation may be a moving target.

It’s that uncertainty that student loan advocates are calling out.

“These actions will only add to the confusion and delays. With more than 5 million Americans already in default and millions more at risk, the Department is choosing punishment over protection by garnishing wages and tax refunds. It must immediately halt these actions and protect Americans’ livelihoods,” Natalia Abrams, Student Debt Crisis Center president and founder, said in a press release. 

The press release also cited one borrower with defaulted loans who shared, “This student loan has put me in so much debt, it’s hard for me to pay bills or even keep up on any. It has failed my credit score and I am unable to get a tax return, it is always taken when I really need it.”

What to do if you’re trying to buy and have student loans

The most important thing borrowers can do right now is stay in good standing with their loans. That means making on-time payments whenever possible and watching closely for any updates about plan changes or transitions. Falling behind can hurt your credit score, trigger wage garnishment, or put tax refunds at risk—each of which can make it even harder to qualify for a mortgage or save for a home.

If you’re unsure which repayment plan you’re on, log in to your Federal Student Aid dashboard to confirm. You can also use the loan simulator to compare your options and see how different plans might affect your monthly payment and total cost over time. Just be aware that switching plans can sometimes reset progress toward forgiveness or raise your long-term balance, so it’s worth reviewing the trade-offs carefully.

In a tight housing market, predictability matters as much as affordability. Knowing where your student loans stand and how they could change can help you plan smarter, qualify more confidently, and move forward when the time is right.