Three-fifths of millennials can’t buy a home because of student debt

As many as 60 per cent of non-homeowning US millennials say that student loan debt is a major hurdle in their ability to buy a home, according to a new poll.

The burden of high student debt also sees many Americans making tough financial choices between buying a home, investing in their retirement, getting married, starting a family, or saving for other purchases.

Nearly one-quarter of all home buyers, and 37 per cent of first-time buyers, had student debt — typically around $30,000, according to the findings of the survey.

The report, prepared by the National Association of Realtors in conjunction with Morning Consult, found that 51 per cent of all student loan holders say that their debt delayed their purchasing of a home.

More than a third (36 per cent) of student loan debt holders said that the burden of repayments had also delayed moving out of a relative’s home. That number rose as high as 52 per cent among Black holders of student debt.

Were people to be freed from their debt, 31 per cent of millennials and 28 per cent of Black debt-holders would use the boost to their finances to buy a home in the future.

The report, titled The Impact of Student Loan Debt, notes that the impact of the burden of student loan debt repayments extends beyond the housing markets and is also plaguing other aspects of people’s lives as they do not feel financially secure to make big life choices

Only 23 per cent of student loan debt-holders understood the costs of attending college before taking out loans, the report also finds. Moreover, 35 per cent of those student loan debt holders did not fully understand their potential for earnings following graduation.

While calls to cancel student loan debt are a major policy plank for the progressive wing of the Democratic Party in Congress, NAR’s recommendations are somewhat more measured.

The association supports a multi-pronged approach that includes an expansion of financial education to help students as they face decisions about funding their college years, and the simplification of aid programmes.

For those who hold debt, opportunities to consolidate and refinance debt at lower rates will help debt-holders lower monthly debt payments, make large purchases, and make wise life choices, the NAR says.

In addition, the group favours expanding tax preferences for employers who assist employees with their student debt, as well as tax forgiveness for debt-holders who have their debt forgiven or paid off by their employer.

NAR has been collecting and examining research during the past eight years to gauge the impact of student loan debt on future homebuyers.

The data pattern now affirms that student loan debt is one of the most significant barriers standing between a potential buyer and the ability to purchase a home as they struggle to put together a downpayment, the group says.

The poll of 1,995 respondents was conducted between 10-16 June 2021 by Morning Consult.