Federal Reserve study finds student loan debt is keeping young people from buying homes

A new study from economists at the Federal Reserve found people aged 24 to 32 are buying houses less often due to the burden of student loan debt.

While the study found that student loan debt is not the main contributor to the decline in home purchases, it is having a significant role, according to CNBC.

“In surveys, young adults commonly report that their student loan debts are preventing them from buying a home,” Fed researchers Alvaro Mezza, Daniel Ringo and Kamila Sommer wrote in the report released Wednesday. “Our estimates suggest that increases in student loan debt are an important factor in explaining their lowered homeownership rates, but not the central cause of the decline.”

{mosads}Home ownership among the age group for the period the researchers studied from 2005 to 2014 fell from 45 percent to 36 percent.

During the same period, home ownership among all Americans only dropped slightly, from 69 percent to 65 percent.

The study found that per capita college debt doubled from $5,000 to $10,000 during the time period.

“This finding has implications well beyond homeownership, as credit scores impact consumers’ access to and cost of nearly all kinds of credit, including auto loans and credit cards,” the researchers noted. “While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits.”

A majority of the college debt increase came during and after the financial crisis, the report found. There is currently a total of $1.5 trillion in education-related loans.

The report from the Federal Reserve economists is slated to be published in the Journal of Labor Economics.


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