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Half of Student Loan Holders Say Their College Debt Prevents Home Purchase

student debt home purchase

Half of Americans with student loans who don’t own property say their debt from college is keeping them from buying a home, according to a report from the National Association of Realtors and Morning Consult.

Broken out by generations, 60% of millennials, born between the early 1980s and the late 1990s, said student debt was preventing them from becoming homeowners, compared with 53% of Generation X, born between the mid-1960s and the early 1980s.

About 37% of Baby Boomers, born from the mid-1940s to the mid-1960s, said student loan was keeping them from purchasing a home, and 39% of Gen Zers, born between the mid-1990s and 2012 said the same.

“Student loan debt is one of the most significant barriers standing between a potential buyer and the ability to purchase a home,” NAR said in a statement released with the report.

About half of student loan holders said their debt has impacted other life choices. One-third said it interfered with their ability to continue their education while 14% said it caused them to delay starting a family, the report said. About 12% of respondents said they work a second job to pay their student debt.

"Aside from just purchasing a home, this report finds that more than half of those with student loan debt have delayed some form of major life choice," said Charlie Oppler, NAR’s president. "Student loan debt isn't just seeping into housing affordability. It's also plaguing other aspects of people's lives."

Americans held $1.7 trillion in student loans in 2021’s second quarter, according to a tally kept by the Federal Reserve. That’s almost double the amount seen a decade earlier.

During the Covid-19 pandemic, Americans had the option of entering forbearance for their student debt if the public health crisis caused them hardship. In August, the government extended that program to Jan. 31.

About one-third of non-homeowners who took forbearance on student loan debt said they don’t think it will impact their ability to get a mortgage, according to the report. About 29% said they don’t think they’ll be able to get a mortgage until they repay the forborne portion of their federal loan.

Only about a quarter of student borrowers understood the costs of attending college before taking out the loans and didn’t expect to find themselves with the hefty debt load, according to the survey.

“Financial education should be expanded to aid students as they face decisions about financing their education, while aid programs should be simplified,” the NAR report said.

The trade group also proposed expanding tax preferences for employers who assist employees with their student debt as well extending tax forgiveness for workers who have their debt forgiven or paid off by their employer.

About The Author:

Kathleen Howley has more than 20 years of experience reporting on the housing and mortgage markets for Bloomberg, Forbes and HousingWire. She earned the Gerald Loeb Award for Distinguished Business and Financial Journalism in 2008 for coverage of the financial crisis, plus awards from the New York Press Club and National Association of Real Estate Editors. She holds a degree in journalism from the University of Massachusetts, Amherst.

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