Rep. Meeks Applauds FHA's Move to Make Its Mortgage Insurance Program More Accessible to Student Loan Borrowers

WASHINGTON, June 19 -- Rep. Gregory W. Meeks, D-New York, issued the following news release:

Congressman Gregory W. Meeks, Senior Member of the House Financial Services Committee, applauded Housing Secretary Marcia L. Fudge for changing the way the Federal Housing Administration (FHA) calculates the student loan debt of potential homebuyers pursuing FHA's single-family insurance program.

Moving forward, FHA will consider potential homeowners' student debt obligations based on what they actually pay monthly, which will assist the approximately 50 percent of federal student loan borrowers in income-driven repayment plans with securing an FHA loan. The new guidelines modify FHA's past practice of calculating potential homeowners' student loan obligations as equal to one percent of their outstanding balance, which unnecessarily disqualified many potential homeowners with student debt from participating in FHA's insurance program.

In a statement, Rep. Meeks stated:

"I thank Secretary Fudge for taking this bold move to assist first time homeowners - who happen to have student debt - to better access FHA's insurance program which is intended to assist low-wealth individuals with securing a home. One sure way of building back better is to promote homeownership, especially among underserved communities as homeownership remains one of the most reliable avenues toward wealth building.

"Student loan burden - and high down-payment requirements - have been significant barriers to homeownership for many young people, especially young people of color. Not only is the FHA's policy change the right thing to do, but it is also consistent with President Biden's stated commitment to racial equity and ensuring our federal policies support often underserved communities. The past rule was indeed overly restrictive and amounted to a student debt penalty that unfairly closed the door to wealth building for many home-ready Americans. I welcome this meaningful change."

Congressman Meeks has focused on changing FHA's student loan debt treatment through his work on the House Financial Services Committee. This week, he introduced legislation consistent with FHA's announced change in its treatment of student loans. The bill was first considered as a discussion draft in December 2019 during a Financial Services Committee hearing examining FHA's impact on homeownership and it was subsequently considered at a March 2021 hearing on racial equity through fair access to housing. He officially introduced the bill - the Making FHA Work for Borrowers with Student Debt Act (HR 3861)- with Georgia Representative Nikema Williams earlier this week. The bill may still be necessary to codify FHA's recent change.