College Debt Souring Young Adults On Homebuying

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Blake Neff Reporter
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A survey of American adults conducted by NeighborWorks America, a non-profit that promotes community development, has helped to confirm what many already suspected: the rising volume of student loan debt is causing Americans to delay the major life goal of owning a home.

Not only that, but the growing burden of student debt appears to be turning many Americans off from home ownership altogether.

Among the 17 percent of adults who had outstanding student loans in NeighborWorks’ survey, debt was cited as the single biggest reason holding them back from becoming homeowners. 17 percent identified debt as the biggest obstacle, while other high-ranking factors such as lack of a down payment (14 percent) and poor credit (10 percent) are also closely connected to the rising expense of student loans.

Among the population at large, meanwhile, one in four people say somebody they know has had to delay buying a home because of student loan debt.

Student loans aren’t just making it harder for young adults to own homes, however. They’re also souring them on the entire principle of home ownership. 20 percent of those with student loans say their attitude towards home ownership has declined significantly in the five years since the 2008-09 recession bottomed out. In comparison, only 13 percent of the population at large feels the same way.

The data helps to explain information released by the U.S. Census Bureau, which has found that among young adults aged 25-29, who are by far the most likely to have student loans, home ownership has seen a steep drop from about 41 percent to just 34 percent.

Delaying home ownership or forgoing it entirely has potential consequences that go beyond real estate markets. For many Americans, the ability to buy a home is coupled with a willingness to get married and have children. For the country at large, then, delayed home ownership may be a driver of social phenomena like falling birth rates.

Historically a relatively small part of America’s debt load, student loans have ballooned tremendously in the last decade. Since the 1990s the proportion of US households holding student debt has doubled, while total outstanding debt has surged from under $200 billion to over $1.2 trillion. Recently, student loans overtook credit card debt as the second largest source of debt in the United States, behind home mortgages.

The survey itself was conducted by Widmeyer Communications from Sept. 25-29, with a sample size of 1,000 U.S. adults. It has a margin of error of plus or minus 3.1 percentage points.

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