If you have a college degree and plan to buy your own home one day, I’ve got good and bad news.
The good news: Having a degree makes you more likely to own a home than someone without one.
The bad news: As your student loan debt rises, your chances of homeownership fall, according to a report released by the Federal Reserve Bank of New York.
Researchers with the Federal Reserve Bank studied how much debt students owed, then compared that by age, graduation status, the level of degree held and homeownership status. Those factors accounted for widely varying homeownership rates.
For example, those who took on debt to pay for an associate degree are more likely to buy a home by age 33 than those who didn’t attend college by 4 percentage points. For those with a bachelor’s degree or higher and no debt, homeownership by the same age is 25 percentage points higher than those who never attended college.
So regardless of debt, homeownership rates rise with education. But when comparing similar levels of education and factoring in the amount of debt each person has, the data show that student loan debt becomes a roadblock to homeownership.
This is especially a concern as student loan debt continues to rise.
The Insane Rise in Student Loan Debt
Ten years ago, the average college grad left school with about $20,000 in student loan debt. By 2015, that number jumped to $34,000. In December 2016, students nationwide owed $1.3 trillion in student loan debt, a 170% increase from 2006, according to the Federal Reserve Bank.
The Wall Street Journal attributes that spike in part to the rising number of Americans attending college.
This is significant because the gap in homeownership between those who graduated with and without debt widens with age.
Beginning at age 25, those who didn’t attend college have a lower rate of homeownership compared to college grads, regardless of student loan debt.
College Levels the Homeownership Playing Field
A bright spot in the study came when researchers looked into how family background impacted homeownership rates.
“One might expect those from wealthier areas, who presumably have greater financial resources, to own homes at a higher rate,” the report said. “However, we find that homeownership rates among college attendees are quite similar for both income groups.
“Thus, in terms of homeownership, college appears to be effective in ‘leveling the playing field’ across students from different socioeconomic backgrounds.”
Your Turn: Is your student debt delaying your home buying plans?
Desiree Stennett (@desi_stennett) is a staff writer at The Penny Hoarder. She graduated with an average amount of student debt and does not own a home.
This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.source The Penny Hoarder http://ift.tt/2ozGSxi
ليست هناك تعليقات:
إرسال تعليق