Study Shows Student Debt Delays Home Buying by Seven Years

The Student Loan Debt and Housing Report 2017 by the National Association of Realtors and the nonprofit group American Student Assistance shows the obvious: Student debt delays household formation, home buying, and saving.

by Mish

The U.S. currently has a student debt load of $1.4 trillion, which accounts for 10 percent of all outstanding debt and 35 percent of non-housing debt. The magnitude of the debt continues to grow in size and share of the overall debt in the economy. While this amount of debt has risen, the homeownership rate has fallen, and fallen more steeply among younger generations.
Student loan debt impacts other life decisions including employment, the state the debt holder lives in, life choices such as continuing education, starting a family, and retirement.
Twenty-two percent were delayed by at least two years in moving out of a family member’s home after college due to their student loans.
Among non-homeowners, 83 percent cite student loan debt as the factor delaying them from buying a home. This is most frequently the case due to the fact that the borrowers cannot save for a downpayment because of their student debt. Among homeowners, 28 percent say student debt is impacting the ability to sell their existing home and move to a different home. The delay in buying a home among non-homeowners is seven years and three years for homeowners.

Awareness of Tuition Costs

  • Before attending college, 28 percent of borrowers knew generally the school “might be expensive” or “might be cheap”, but had no further information.
  • More than one-quarter of borrowers had an understanding of tuition, but had little understanding of other costs such as fees and housing expenses.
  • One in five borrowers understood all the costs including tuition, fees, and housing.

Defaults

  • Thirty-two percent of student loan borrowers surveyed had defaulted or forbore on their student loan debt
  • Two-fifths of borrowers who had personal incomes of less than $25,000 in 2016 had defaulted or forbore on their student loan debt in the past.

Life Choices

  • Among life choices, more than half of respondents believe they are delayed in continuing their education or starting a family due to student loan debt.
  • Forty-one percent would like to get married, but are delayed from marriage due to their student loan debt.
  • Only 13 percent of respondents did not have a life event delayed due to debt.
  • 28 percent of respondents rent with roommates.
  • Fifteen percent live with friends or family and pay rent, and 15 percent live with friends and family and do not pay rent.
  • Twenty percent own their own home and 16 percent rent solo.
  • Thirty-five percent of younger millennials live with family (both paying and not paying rent) compared to just 24 percent of older millennials.

Student Debt Impacts

Mish Notes

  1. Younger millennials are those born 1990 to 1998. Older millennials are those born 1980 to 1989.
  2. The study did not ask how many regretted going to college.
  3. The study did not ask how many regretted paying what they did pay for college.

Mike “Mish” Shedlock

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