Student loan debt has long been cited as one of the Millennial generation’s biggest barriers to homeownership. But it seems the hurdle might not be as insurmountable as many think.
Americans currently owe a collective $1.5 trillion in student loans, according to Student Loan Hero. In just the class of 2017, the average student has about $40,000 in debt – almost enough for a 20% down payment on a median-priced home.
Naturally, that debt is going to affect these young graduates’ homebuying opportunities – but does it dash them entirely? Definitely not.
According to a 2017 study from the Federal Reserve, every $1,000 in student loan debt delays homeownership by about 2.5 months, but it doesn’t prevent homeownership entirely. In fact, by the time college grads reach their 30s, those with student loan debt have a homeownership rate nearly identical to those who didn’t take out loans.
Odeta Kushi, a senior economist for First American, said that extended loan terms, higher incomes and the lower payment-to-income ratios that result from these factors are helping minimize the impact student loan debt has on homeownership. Continue reading