Experts are taking notice of the decrease in home ownership amongst the 24-32 year age range. According to a Federal Reserve study, the percentage of homeowners in this age group dropped from 45% to 36% from 2005 to 2014 with 20% of the decrease likely a direct result of escalating and pervasive student loan debt.
Young people at the age to start looking to buy a home of their own are feeling the burden of student loan. Their educational expenses are sticking around – putting a dent in the pockets of young people and contributing to a much lower level of home ownership throughout the past decade. According to Federal Reserve economists, the $1.5 trillion in education related debt is not the principal contributor to the decline in housing purchases, but it is playing a significant role. It’s having a notable impact on those aged 24 to 32.
When surveyed, young adults often report that their student loan debts prevent them from purchasing a home. Federal researchers estimate that increased student loan debt, while not the central cause of the decline, are an important factor when attempting to explain lowered homeownership rates. While the decline in homeownership amongst Americans during the study period was approximated at 4%, from a peak of 69% in 2005 to 65% in 2014, the 24 to 32 age group say a more significant drop that may more accurately be described as a plunge from 45% to 36%. Other causes for the decline were not indicated by the researchers, but they attributed around 20% of the overall decline to student loan debt. Per capita, student loan debt doubled during the period from $5,000 to $10,000 by economists involved in the study.
According to the conclusions in the study, for each $1,000 increase in student loan debt, there will be a subsequent 1-2% decline in homeownership rates. When applying this knowledge to the general population, this means that about 400,000 people who would otherwise have owned a home, did not purchase a home due to their student loan debt.
In addition to affecting the ability to purchase a home, overwhelming student loan debt can have a negative affect on credit scores which can limit a consumers’ access to various types of credit including auto loans and credit cards. Investing in a postsecondary education continues to yield, on average, positive, substantial returns, but can also come with student loan debt at levels that can easily become a financial burden which can lessen the benefits of obtaining an education. If you are struggling with student loan debt and you aren’t sure what your options are, please get in touch with the experienced student loan debt attorneys at Aronow Law PC today.