Student Debt Impedes Ability to Buy a Home

Demystifying Valuation, Economic Damages + Forensic Accounting

The National Association of Realtors (NAR) recently polled student debt holders who had not defaulted on their loans. The majority of them graduated from a four-year public or private college. Below is a summary of some of the more interesting findings of the study.

  • 43% of those polled had between $10,000 and $40,000 in student debt, while 38% had $50,000 or more. The most common debt amount was between $20,000 and $30,000.
  • 79 % of older millennials (ages 26 to 35) are saddled with total debt between $70,000 and $100,000.
  • 71% of non-homeowners believe their debt is preventing them from purchasing a home. Furthermore, over 50% of respondents said they will not contemplate buying a residence for at least five years.
  • 40% of respondents who live with family members after graduation are unable to move out due to student debt.
  • A majority of non-homeowners earning over $50,000 a year reported that student debt is impeding their ability to save for a down payment. (*)

According to John Zurick, President and CEO of American Student Assistance, “It is imperative to the nation’s economy that we find immediate and practical solutions to financially empower the 43 million Americans with student debt. No one should fail to realize the full potential of their formal education simply because of finances. We invite the higher education community, the U.S. government, the private sector and others to join with us in this movement.”

In summary, student loans are cited as the primary cause of college drop out and some academicians and politicians are asking the federal government to ease credit requirements for students encumbered with student debt.

By Gary Ringel, CGREA

(*) $50,000 was used as a benchmark because it is in excess of the median qualifying income required by lenders to buy a single-family residence.

Source: “Is Student Debt Holding Back Homeownership?” authored by Xhevrije West and published on MReport on June13, 2016