Student Loans And Ownership

Dated: 05/04/2016

Views: 187

Study: Student Loans Don’t Harm Ownership


High levels of student loan debt are not to blame for the drop in the home ownership rate among younger demographics, according to a new report.

Researcher Susan Dynarskly, a senior fellow with the Brookings Institute and a University of Michigan economics professor, discounts prior studies that have suggested a correlation between the two. In her study, she pulled Federal Reserve data and compares those with no college, those with college but no student debt, and those with college and student debt. She found college degrees, and the earnings premiums that come with them, build assets that help people buy homes. The findings appear in the Brookings’ Evidence Speaks series, “The Haves and Have-Nots in Homeownership: It’s Education, Not Student Debt.”

Dynarskly says that, prior to the Great Recession, 35 percent of young people with a college education and no student loan debt owned a home. That compares to only 23 percent of those without a college education. By 2010 however, 26 percent of those with a college education (and no student debt) owned a home compared to 17 percent of those without a college education.

So what's the real reason millennials aren't buying?

Dynarskly acknowledges that those who went to college and accrued student loan debt tend to have a slower start to home ownership. She says that is likely because the loan payments add to the monthly debt ratio in qualifying for a mortgage. 

Those without a college degree were more likely to own a home at an earlier age than those who went to college and have student debt because they had been working since high school and settled down earlier, Dynarskly says. Their college-educated counterparts, on the other hand, delayed entering the labor force due to college. But by age 27, the college-educated tend to catch up, she notes. What’s more, by age 35, those with a college degree lead the homeownership pack by about 14 percentage points.

Student loan debt has been increasing. The typical undergraduate borrower with a BA has a debt of $30,000 and owes $350 a month or $4,200 a year. That said, they tend to earn higher salaries than those without a college degree.

“The college-educated — even those with student debt — are winners in our economy,” Dynarskly says.

http://realtormag.realtor.org/daily-news/2016/05/04/study-student-loans-don-t-harm-ownership 

Blog author image

Todd Lamarque

A little about us, we come to this career as a second career as we were in the education world before for over 20 years as a principal and teacher. We are a team so you get two agents to meet all your....

Latest Blog Posts

Getting Ready For Spring Training

We have a client that did a beautiful remodel in McCormick Ranch. He asked if we could help him get it rented out for Spring Training. Having some connections in the baseball industry, I quickly

Read More

Jen And Her Dad Jack

Glad we could help!!When Jen came to us to sell her dad’s house we were glad to help.  We met at the home and gave her some advice and hints to help her maximize her sale price and to the

Read More

Congrats Joan

Congrats to Joan & Scott!It took some convincing but Scott let us List his mother’s home when she had moved on to an assisted living community. Scott had tried for some time to sell it as a

Read More

Coming Soon

We are so excited to have the opportunity to work with Dave & Michele. Several years ago they bought a really great condo in the Desert Ridge area for their daughter. Their Daughter has since moved

Read More