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New Evidence Links Student Debt with Inability to Purchase a Home

Wondering whether student debt really prevents non-homeowners from making the jump to homeownership? The National Association of Realtors® and American Student Assistance have a message: Just ask one.

According to a joint survey released today by representatives from NAR and the ASA’s “SALT” program, 71 percent of non-homeowners repaying their student loans (on time, mind you) believe their debt is stymieing their ability to buy a home. In addition, slightly more than half of all borrowers surveyed say they expect to be delayed from buying by more than five years because of student debt. IMG_0841

“Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase,” said NAR Chief Economist Lawrence Yun.

But it isn’t just first-time homebuyers who are being affected by student debt. The survey also found that student debt has an impact on the overall housing supply by holding back some current homeowners who otherwise would like to sell.

Nearly a third of current homeowners (31 percent) in the survey said student debt is postponing plans to sell their home and purchase a new one.

And that much-read-about millennial who is still living at home with mom and dad? They’re feeling the pinch as well. Forty-two percent of respondents said that student debt delayed their decision to move away from a family member’s home after college.

NAR Vice President Sherri Meadows, a Realtor® from Ocala, Florida, joined Yun and others at the NAR event to unveil the survey. She noted that the linkage between student debt and delayed homeownership is clear, adding that NAR has led on this issue and will continue to spread the word.

“Realtors® work closely with our clients and consumers every day,” she said. “We understand the severity of the problem. This is not an abstract issue for us. This is why Realtors® are leading the real estate industry in the discussion of student loan debt and its impact on housing by generating the most encompassing research on this topic.”

The survey, which only polled student debt holders current in their repayment, yielded responses from borrowers with varying amounts of debt from mostly a four-year public or private college. Forty-three percent of those polled had between $10,001 and $40,000 in student debt, while 38 percent had $50,000 or more. The most common debt amount was $20,000 to $30,000.

“It is imperative to the nation’s economy that we find immediate and practical solutions to financially empower the 43 million Americans with student debt,” said SALT® President John Zurick. “No one should fail to realize the full potential of their formal education simply because of finances.”