Can Student Loans Take Your House? (2024)

FAQs

Can Student Loans Take Your House? ›

Student loans are a form of unsecured debt not backed by collateral. So, your home or car cannot be seized if you fail to make payments.

As a result, student loans can't take your house if you make your payments on time. However, if you miss enough student loan payments, your accounts will first move into delinquency status and then into default status. Once you default on student loans, you're at risk of having your house taken to pay them back.

If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.

If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans.

Student loans generally won't preclude you from getting approved for a mortgage — for some people, they might even improve their credit score. Still, if you have student loans, there are some steps to consider if you're weighing applying for a mortgage.

Most student loans are unsecured loans. If a defaulted student loan is unsecured, like all federal student loans and most private student loans, the lender must sue the borrower and get a court judgment against the borrower before they can seize the borrower's property.

Do student loans go away after 7 years? While negative information about your student loans may disappear from your credit reports after seven years, the student loans will remain on your credit reports — and in your life — until you pay them off.

Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones. ED will continue to discharge loans as borrowers reach the required number of months for forgiveness.

Your student loan won't be cancelled just because you're moving overseas. You'll still have to pay it back. If you don't, the penalty is a “fixed monthly payment” that you have to pay instead of the normal monthly repayment amount. It's likely to be far more than you'd have to pay otherwise¹⁺².

No one inherits your student loans if you die, but private lenders can seek repayment from your estate, a cosigner (for loans taken out before Nov. 20, 2018), or your spouse if you took out the debt during your marriage and you live in a community property state.

How to pay off 250k in student loans? ›

But it can also increase costs if you need to commute to school or have trouble managing money for groceries. Using student loan money to pay the rent can also increase your costs since student loans must be repaid, usually with interest. On the other hand, you may reduce costs by living on campus in a dorm.

Average student loan debt in America

51% of 2021-22 bachelor's degree recipients graduated with an average of $29,400 in student loan debt. Among all borrowers, the average student loan debt in 2023 was $38,787. 53% of federal student loan borrowers owe $20,000 or less.

And while private lenders might not necessarily be able to sue you while living abroad, the missed payments could negatively hurt your credit score. Private and federal student loan defaults can remain on your credit report for up to seven years, impacting various aspects of your life.

By law, you must repay your loan in line with the loan contract and regulations. If you don't make repayments, SLC have the right to take legal action to recover your debt. This means SLC can get a court order to make you repay the total debt plus interest and penalties in a single payment.

Lenders consider student loan debt as a part of your total debt-to-income (DTI) ratio, which is a vital indicator of whether you'll be able to make your future mortgage payments.

Before the pandemic hit in FY 2019, only 261 federal civil lawsuits for student loan default recoveries were filed nationwide. However, there was an earlier period when federal loan recovery suits were more common.