The return of federal student loan payments in May 2025 has triggered a significant credit disruption for millions of Americans, with more than 2.2 million borrowers seeing their scores drop by 100 points or more in just the first few months. For the multifamily housing industry, this sudden credit hit is already making it harder for otherwise qualified renters to secure apartments — a ripple effect that’s adding new urgency to risk management strategies.
Aaron Victorson, EVP of Sales and Revenue Operations at TheGuarantors, warns that this wave of credit degradation is pushing more renters into conditional approval territory or outright disqualification. While a credit score of 600 has long been a common cutoff for lease approval, the student loan impact is pulling many solid renters below that threshold — even those with previously stellar credit.
“This is the difference between being approved yesterday and being denied today,” Victorson said.
Even operators who don’t actively weigh student loan debt in their screening are likely to feel the long-term effects. Delinquency rates are rising sharply — especially among borrowers over 50 — which puts more pressure on property owners to maintain occupancy while minimizing bad debt.
The broader economic picture isn't helping either. Credit card and auto loan delinquencies are climbing, household debt hit $18.2 trillion in Q1 2025, and inflation is pushing up the cost of living. In this climate, many operators rely too heavily on income-to-rent ratios without accounting for all the other drains on a resident’s paycheck — from groceries and gas to car payments and now, student loans.
That’s where solution providers like TheGuarantors come in. Their products help bridge the gap between traditional underwriting requirements and the evolving financial profiles of today’s renters. By providing financial guarantees and risk mitigation tools, TheGuarantors enables multifamily operators to expand their pool of qualified renters — without loosening their standards.
According to Victorson, TheGuarantors’ programs can reduce bad debt by up to 70% and offer six to 12 times the coverage of a typical security deposit. Renters benefit too, gaining access to apartments they might otherwise be excluded from, while operators maintain stable, well-occupied communities.
In the background, another risk looms: the growing threat of AI-assisted application fraud. As more renters fall short of traditional credit benchmarks, some are resorting to deceptive practices, which AI tools make easier and more convincing than ever. This further raises the stakes for operators to adopt third-party protections and modernize their screening processes.
“Renters might look riskier on paper now, but many are still responsible tenants,” Victorson said. “Our job is to help operators tell the difference — and meet the market where it is, not where it used to be.”
In a fast-moving landscape marked by inflation, rising debt, and credit volatility, operators can no longer rely on static approval models. TheGuarantors and similar platforms are becoming essential partners in balancing occupancy goals with long-term financial health — especially as macroeconomic forces continue to shift beneath the surface.
