New Study: Student Loan Debt Delays Millennial Homeowners
According to a recent study, 80 percent of millennials with student loan debt don’t own a home, and most believe that their student loans are to blame.
This past April, the National Association of Realtors (NAR) and American Student Assistance (ASA) released a joint study. The study looked at how student loan debt affected millennials’ ability to make financial decisions. Over 90,000 student loan borrowers completed the 41-question survey. Their ages ranged from 22 to 35, and all had student loan debt they were repaying.
The results of this study were eye-opening. 79 percent of millennials borrowed money to pay for their four-year degree. The average borrower’s student loan debt exceeded their yearly income, and 51 percent were repaying a balance of over $40,000.
Only 20 percent of the borrowers surveyed owned a home. The majority expected to put off buying a home for seven years due to student loan debt. But owning a home is not the only financial decision some millennials put off. Student loan debt forced millennials to postpone other life choices as well. 86 percent either had to take on a second job or stayed in a job they didn’t like due to their student loan payments. Over half said that they didn’t feel comfortable continuing their education. 41 percent chose to wait to get married or start a family because of their student loan debt.
And 61 percent put off saving for retirement while 32 percent contributed at a lower rate. SAR's chief economist Lawrence Run found these results troubling because of their potential to impact millennials’ ability to build wealth and financial stability. “Being unable to adequately save for retirement…could have long-term consequences to the financial well-being of these millennials,” Yun said.
Sales from first-time home buyers have declined in recent years. Yun said the results of this study may indicate that student loan debt is at least partially to blame. And a quarter of millennials were unable to sell their current home and buy a new one which slowed the turnover in the housing market.
The survey also indicated that many millennials had an incomplete understanding of what it would take to pay for college. Only a fifth of all borrowers indicated that they understood the tuition and housing expenses before taking on the debt.
Many studies have examined the emotional and financial repercussions of student loan debt. Jean Eddy, president and CEO of ASA, said that this study demonstrated the need to make student debt more manageable for current and future generations. On that note, moving forward, realtors and policy leaders seem committed to working together to ease the burden of student loan debt and make it easier for borrowers to qualify for a mortgage.