Economists' Outlook

Housing stats and analysis from NAR's research experts.

Race, Homeownership, and Student Loan Debt

When examining the issue of student loan debt, it is essential not to overlook the relationship to race. The homeownership rate gap now for Black and White homeowners is as wide as when the Fair Housing Act started in 1968. The focus is often placed on the Black and White ownership gap, which stands at a 30-percentage point spread—thus the homeownership rate for White individuals is 73.3% while the Black homeownership rate is 42.1%. The rate of Hispanic/Latino homeownership is 47.5%. There is an extensive list of reasons why the gap remains persistently wide, but student loan debt is one part of the complicated equation.

Line graph: U.S. Homeownership Rates by Race, 1994 to 2019

Source: U.S. Census Data

According to the National Center for Education Statistics,1 Black college enrollment increased 47% between 2000 and 2016. During the same time period, Hispanic college enrollment increased 134%. While attending college, Black students are the most likely to receive college loans at 71% compared to White students at 56% and Hispanic students at 50%.

Unfortunately, the graduation rate for an undergraduate degree for Black students within six years is at 40% compared to that of White students at 64% and Hispanic/Latino students at 54%. The concern in not obtaining a degree is that the debt is obtained, but without the qualification, it is much more difficult to pay back student loans. This becomes even more difficult when examining the earnings of recent graduates by race.

Among those with a bachelor's degree, the earnings for a 25- to 34-year-old was $59,600 for White graduates compared to $44,300 for Black graduates and $45,200 for Hispanic graduates.2 It is difficult to obtain hard data on the amount of student loan debt held by race as it is not reported by the New York Federal Reserve as it is for age groups. A study comparing Black/African Americans and White/Caucasians four years after graduation found that the debt was $52,726 compared to $28,006, respectively.3 The amount of debt held by recent graduates speaks to both the disproportionate amount of debt obtained, and also the ability to pay back loans based on earnings after graduation. However, it is important to note that for all races the most successful way to enter the middle class in the U.S. is by attending college and obtaining student loan debt often goes hand-in-hand with this aspiration.

Unfortunately for debt holders, the employment situation after graduation is often not a reflection of the obtained education path but a matter of asking “what can help me pay down this debt?” For all debt holders, 58% found their employment decisions were impacted by their debt. Some stayed in jobs they did not like, were not in their career path, or even took second jobs to pay off debt faster. This share jumps to 70% of Hispanic and 69% of Black student loan debt holders.

Bar graph: Employment Decisions for Student Loan Debt Holders, by Race

Source: National Association of REALTORS® The Impact of Student Loan Debt

Student debt has also impacted borrowers' life choices, such as deciding whether to pursue continuing education, to start a family, or in having a long-term partner/getting married. These choices are more likely to impact Hispanic and Black borrowers than White borrowers.

For young adults obtaining student loan debt, homeownership may be a distant timeline in the future. First the debt holder must leave the family nest. Within recent survey findings from NAR, Black and Hispanic student loan debt holders have lower headship rates (the ability to live outside of family members' homes) after obtaining student debt. For all borrowers, 46% were delayed in moving from a family members' home after obtaining student debt. By race, this rises to 65% of Hispanic borrowers and 52% of Black borrowers who were delayed moving from a family member's home.

Bar graph: Delayed Moving Out of Family Member's Home After Obtaining Student Loan Debt, by Race

Source: National Association of REALTORS® The Impact of Student Loan Debt

In the recent NAR survey the Impact of Student Loan Debt, debt holders were directly asked if student loan delayed them from purchasing a home. Black debt holders were less likely than White and Hispanic debt holders to say student loans are holding them back from purchasing a home. It may be that, given the financial and economic constraints of Black student loan debt borrowers, the dream of homeownership is in the distant future for now. However, when asked what student loan debt holders might do with additional money if they paid off their student loan debt, a higher share of Black borrowers cited purchasing a home at 28% compared to 24% of all borrowers.

Bar graph: Delayed Purchasing a Home Due to Student Loan Debt by Race

Source: National Association of REALTORS® The Impact of Student Loan Debt

Successful Black home buyers are twice as likely to be holding student loan debt in comparison to successful White home buyers—43% compared to 21%. Black home buyers also carry a median of $10,000 more debt than White home buyers—$40,000 compared to $30,000. Twenty-four percent of Hispanic/Latino home buyers have student loan debt, with the lowest median amount at $20,000. The higher amount of student loan debt held by Black buyers cuts into the ability to save for a downpayment, closing costs, and hurts the buyer's debt-to-income ratio. This is likely compounded by the fact that Black home buyers have lower household incomes than Hispanic and White buyers.

The differences in student loan debt held by successful buyers may be one of the many reasons the home purchase price for Black buyers is lower than that of White buyers. Hispanic and Black Americans purchased homes that were 11.2% and 10.6% less expensive, respectively than White Americans, when controlling for household income, home size, location, and down payment help from family. This purchase price difference contributes to the disproportionate impact the current housing affordability crisis has on Black and Hispanic home buyers. It also contributes to lower wealth gains over time, once a home is obtained.

Bar graph: Home Buyer Purchase Price, Student Loan Debt, and Household Income by Race

Source: National Association of REALTORS® 2021 Snapshot of Race and Home Buying in America

For more information on NAR's political advocacy and research on student loan debt go to:

1 Status and Trends in the Education of Racial and Ethnic Groups 2019

2 U.S. Department of Commerce, Census Bureau, Current Population Survey (CPS), Annual Social and Economic Supplement, 2020. See Digest of Education Statistics 2020, table 502.30.

3 SCOTT‐CLAYTON, J. and LI, J., 2016. Black‐White Disparity in Student Loan Debt More Than Triples After Graduation. Washington, DC: Brookings Institution.