Here are a few statistics to put the correlation of student loan debt and homeownership into perspective.
- In 2003, student loan debt stood at $241B, as in Billion.
- In 2018, student loan debt stands at 1.4T, as in Trillion.
Today, the nation’s student loan debt surpasses credit card debt as the largest source of personal debt outside of mortgage loan debt. Today, people 35 years old and younger are more likely to be living with parents or elders than they are to be living in their own home. Today, people 35 years old and younger are more likely to be living with 2-5 people, likely unrelated, they may or may not know in order to make ends meet.
Additionally, underwriting standards required for mortgage loans have become much stricter in the last decade. The result? It’s more difficult to qualify for a home loan today than it was 10 years ago…AND many millennials are moving to cities that have unaffordable home sale price tags…AND mortgage interest rates are rising to levels not seen for some eight years… AND home sale prices continue to soar while wages continue to stagnate…AND, “If people had the same levels of student loan debt as (they had) about 20 years ago, they probably would be buying a lot more homes than they’re buying now,” said Wilbert van der Klaus, economist with the New York Federal Reserve.
This last phrase by the economist with the NY Fed brings us to these statistics:
In 2003, the percentage of homeowners under the age of 35 stood at 42%.
- In 2017, the percentage of homeowners under the age of 35 stands at 35%.
For most people 35 years old and younger, it’s difficult if not impossible to even imagine owning a home where one could stay and live for a while. The National Association of REALTORS® and the nonprofit American Student Loan Assistance tell us in a recent joint study that more than +80% of people 35 years and younger said that student loan debt forced them to stall their plans to buy a home. Those forced to stall put off their buying a home for about 7 years.
One bright spot in all of this is that many companies, hundreds of companies, companies such as Fidelity and Gradifi, are offering their new hires student debt loan assistance as a benefit.