How student loan debt is impacting homeownership

Seventy-six percent of adults with student loan debt reported it has delayed their homebuying.

According to the National Association of Realtors® Research Department And American Student Assistance® Student Loan Debt and Housing Report 2017: When Debt Holds You Back, homebuying is the top desire being trumped by student loan debt. Taking a vacation, purchasing a car and continuing education are also top desires being put on the backburner. Forty-one percent of borrowers also reported they have delayed marriage due to student debt, however, 13 percent reported they have not delayed a major life event due to student debt.

For most respondents (94 percent) in the survey, they had student debt, and for 29 percent, so did their spouse or partner. Seventy-nine percent have debt from a four-year college, while 19 percent have debt from a two-year college, and 29 percent from graduate school. Two-thirds have been out of school for one to three years, while 22 percent have been out for four to six years. Forty-five percent chose their college based on academics, while 24 percent chose it due to finances. More than two-thirds attended a public college, while 46 percent chose a private school. The median student loan debt is more than $41,000.

More than a quarter of attendees only had a ‘minimal’ idea of how much school costs, and 26 percent reported they understood tuition costs, but not other fees, like housing, books and so forth. Eight percent said they did not know anything about the cost before attending.

About one-third of borrowers have defaulted or forbore their student debt, and 35 percent of would-be homebuyers reported they had defaulted or forbore on debt. Sixty-three percent said they would put money toward a home if they had no debt. The majority of respondents (28 percent) rent with roommates, while 20 percent are homeowners, and 16 percent rent alone.

Among those who do not own a home, 83 percent said student loan debt is what has delayed them.  Eighty-five percent said they cannot save for a down payment, while 74 percent do not feel financially secure enough and 52 percent said they cannot qualify for a mortgage.