Mounting student loan debt stopping young Americans from buying homes

The declining U.S. home ownership rate can be partially attributed to rising levels of student loan debt, a new study found.

According to researchers at the Federal Reserve Board Division of Research & Statistics, a $1,000 increase in student loan debt can cause a 1 to 2 percentage point drop in the homeownership rate for borrowers during their late 20s and early 30s. The homeownership rate among young Americans fell nine percentage points between 2005 and 2014—and rising student debt accounted for about one-fifth of the overall decline during that time period.

If not for those increased student debt burdens, an additional 400,000 young Americans would have owned a home by 2014, researchers concluded.

Outstanding student loan debt surpassed $1.5 trillion in 2018 – second only to mortgage debt – doubling over the past decade.

But the effects of mounting debt reach beyond buying a home. The Fed study found that higher debt burdens negatively impact borrower’s credit scores – which can not only affect their ability to obtain a mortgage, but nearly all other types of credit as well.

The Fed concluded that the benefits of secondary education – including higher wages in some cases – are being “lessened” by the burdens associated with increasing student debt loads.


During the company’s fourth-quarter earnings call this week, JPMorgan Chase CEO Jamie Dimon said that a stronger U.S. credit profile would prevent a near-term recession from looking anything like the financial crisis in 2007. However, he did identify student loans as an at-risk area due to a “lack of discipline.” The banking executive also noted that because student debt is largely owned by the government, “the lender will not be there, so a lot of these borrowers are going to be stranded.”

The student loan crisis could come further into focus for Congress this year, too. Freshman Rep. Alexandria Ocasio-Cortez, D-N.Y., said she was excited to focus on it in her new role on the House Financial Services Committee, chaired by Rep. Maxine Waters, D-Calif. Waters is a staunch advocate for consumer protections