New research indicates that having a higher education improves the chances of owning a home despite rising levels of student loan debt, according to First American Financial Corp.
"Millennials’ pursuit of higher education is good news for the housing market because it seems that education is not only the key to greater earning power, but also to homeownership," First American Deputy Chief Economist Odeta Kushi said.
Millennials, or those ages 24 to 39 in 2020, are the largest living adult generation, according to the Pew Research Center. They range from recent graduates or even those still in school to professionals deep into their careers. And they are more educated than previous generations, recent findings from First American showed.
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Higher education levels pay off
Millennials are currently one of the most educated generations, First American’s report showed. By the time they reached their mid-40s, 30% of Baby Boomers had their bachelor’s degree or higher. Gen Xers reached the same point by their late 20s and millennials reached it by their mid-20s.
Millennials with a Bachelor’s degree had a median household income of $101,000 and those with a graduate degree had a median household income of $120,000. This compares to the median household income of $60,000 for millennials with a high school diploma or $35,000 for those without one.
These higher incomes have given college-educated millennials more homeownership opportunities even amid higher levels of student loan borrowing. The homeownership rate among millennials with a bachelor’s degree was 9% higher in 2020 than those with a high school diploma.
If you are interested in being a homebuyer and taking out a mortgage loan but are struggling with student loan payments, consider refinancing to lower your monthly payment by taking advantage of lower interest rates. Visit Credible to compare multiple student lenders at once and choose the lender with the best rate for you.
Student loan debt can delay homeownership
While college graduates are more likely than non-graduates to purchase a home, student loan debt can create a major roadblock and slow that process down. In fact, 51% of all student loan holders say the effect of student loan debt has delayed them from purchasing a home, according to a recent study from the National Association of Realtors (NAR).
But while it might be delaying the process, First American’s data showed that those who attend college would eventually see a higher homeownership rate due to their increased incomes.
"In 2000, the difference in the homeownership rate between those with a high school degree and those with a college degree was 3.7%," Kushi stated. "By 2020, this gap almost doubled to 6.9%."
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