Wage Garnishment for Student Loans in North Carolina

My property manager at our North Carolina community just got a notice from a tenant that she will be late with her rent for the next 3 months because her wages are being garnished for student loans and she can't get a hearing until then.

I heard about this and now I am actually seeing what I suspected would happen, late payments.

In the past, we have not counted student loans during the credit approval part of the application. Now, we have to reconsider that.

I think I need to count them the same as a judgement. If they are on the credit report as "in collections," they have to be paid in full for us to approve the application.

I need to hear from those of you who consider student loans during the approval process. How do you handle it with your resident criteria?

About five years ago, we noticed that several residents were having issues with paying back their student loans because they had not been able to get the higher paying job out of college they expected to get. If they could not get their loans deferred, then they also were being garnished. We always considered these loans a liability in the selection criteria. We consider anything financial liability a factor in acceptance. However, I would not consider that garnishment a reason to allow late rent payments. Whatever happened to people taking on second jobs when they need extra money?

Ho much of an issue is this? If you have a high student demographic on your property, perhaps your approval criteria needs to be changed. If this is an isolated case, treat it late rent the way you do for everyone else.

Just as we don't discriminate on a residents source of income, we also can't discriminate on the reason for late payments. Late payers are treated as late payers, which may require them to live within their means by finding a place they can afford.

This is a new law that has only been in effect a couple of years. My property is just across the border from Charlotte, NC in a college town. Half of my tenants work in Charlotte. I see a lot of student loans in my market. We have a reputable University and a reputable technical college. I am only 1.5 hours from the University of South Carolina and 2.5 hours from Clemson University.

In Charlotte, there is Phoenix University, UNC Charlotte and many other smaller education institutes. So yes, I see a lot of student loans.

We have decided to start including student loans in our credit screening process. Only if they are listed as "in collections" or "paid as agreed." We are not counting "deferred" at this time.

It could be a growing trend. We only know about 1 because they called and said they would be late. There could be others we don't know about who are managing.

Thanks for sharing!!

Sandy