Overview

Among recent home buyers, one-quarter have student loan debt and the typical amount is $25,000. The share of those with student loan debt rises to 41% among first-time home buyers. Even among successful home buyers this amount of debt is cited as a difficulty in their home buying process.

Political Advocacy

Current Legislation/Regulation
None at this time.


In-Depth

Letters to Congress
Letters to federal agencies
Issue summary
NAR Federal Issues Tracker


Legislative Contact(s):

Ken Fears
kfears@nar.realtor
202-383-1066

Regulatory Contact(s):

Ken Fears
kfears@nar.realtor
202-383-1066

What is the fundamental issue?

Research continues to indicate that the continued rise in student debt along with a weak labor market has a long-term impact on the ability of first-time homebuyers, particularly lower income consumers, to qualify for mortgages. Many of these potential borrowers find a significant portion of their total monthly debt is comprised of student loan payments. Additionally, lower price point homes available to purchase are at historical lows which further price out potential buyers with student loan debt as home prices continue to rise.

I am a real estate professional. What does this mean for my business?

NAR research indicates that student debt negatively impacts the ability of potential home buyers to save for or meet down payment requirements. Student debt is also having an impact on potential homebuyers’ ability to qualify for a home due to high debt-to-income levels. These factors have limited their access to affordable mortgage options needed to purchase a home. Though a vast majority of borrowers have been responsible and diligent in making their student loan payments, their ability to save for priorities such as emergency savings, medical expenses, and down payments have become more difficult and impact their decisions such as purchasing a home.

NAR Policy:

NAR strongly supports policy proposals to allow student loan borrowers to refinance into lower interest rates and to streamline loan programs. Additionally, NAR supports policy proposals that promote student loan simplification, clarity and education. Further, NAR supports policies that provide tax relief to student debt holders, as well as to employers who choose to assist with their employees' student loan debt burdens. In addition, NAR supports policies that provide tax relief to those borrowers with forgiven student debt. NAR also shall ensure that mortgage underwriting guidelines related to student loan debt are standardized and do not impair homeownership.

Legislative/Regulatory Status/Outlook

In the last Congressional session, lawmakers in both parties proposed changes to the student loan program to deal with the large outstanding debt.

Democrats backed measures that would cap the burden on borrowers. Republicans argued that college graduates earn more than non-graduates and should be able to pay off their loans. However, Republicans were willing to simplify the federal loan system and they advocate giving borrowers more clarity about the debt and their ability to pay it back. Also, some Members of Congress seemed interested in tax changes to assist those paying off student loans.

NAR Committee:

Conventional Financing and Policy Committee

References

We've already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require a password.


Infographic: Student Loan Debt and Housing: When Debt Holds You Back

CARES Act (COVID-19 Stimulus) and Student Loans

What Does the Covid-19 Stimulus Bill Mean for Loan Forgiveness, Financial Aid and College Students? (The Wall Street Journal, Mar. 10, 2021)

'I Feel Like I've Gotten Trapped in This Loan.' Here's Why the COVID-19 Stimulus Package Only Helps Some Borrowers (Time, Apr. 2, 2020)

How the CARES Act Stimulus Affects Your Student Loans (Experian, Apr. 1, 2020)

Got Student Loan Debt? Read This. (Federal Trade Commission, Mar. 30, 2020)

Student Loan Debt’s Impact on Home Ownership

I have nearly $600,000 in student debt after getting four college degrees. Can I still buy a home? (MarketWatch, Mar. 1, 2021)

Should I Refinance My Student Loans If I’m Buying a House? (Forbes Advisor, Feb. 12, 2021)

If You Have Student Loans, It May Affect Your Ability To Buy A Home—Here’s How (CNBC, Feb. 4, 2021)

The Role of Federal and Private Student Loans in Homeownership Decisions (Journal of Consumer Affairs, Mar. 2020) E

Student Loans and Homeownership (Journal of Labor Economics, Jan. 2020) E

Heavy Student Loan Debt Forces Many Millennials to Delay Buying Homes (NPR, Feb. 1, 2019) 

“Homeownership rates for people ages 24 to 32 dropped nearly 9 percentage points between 2005 and 2014 — effectively driving down homeownership rates overall. In January, the Fed estimated 20 percent of that decline is attributable to student loan debt”

Homeownership among Young Americans: A Look at Student Loan Debt and Behavioral Factors (The Journal of Consumer Affairs, March 1, 2018) E

From Abstract: “Three key findings arise from the research. First, life cycle and demographic characteristics, such as marital status, education, and income, continue to be strong predictors of homeownership. Married households with a college degree and children are among the most likely to own a home. Second, young adults with student loan debt are no more or less likely to own a home than someone without debt after controlling for a number of factors; however, students who have already paid off their loans are more likely to own a home. Finally, respondents who express a willingness to take risks in finances are more likely to own a home while those who are more conscientious are less likely to own a home.”

Student Debt Delaying Millennial Homeownership by 7 Years (National Association of REALTORS®, Sept. 18, 2017)

Student Loan Debt and Housing Report (National Association of REALTORS®, 2017)

eBooks & Other Resources

eBooks

Generation Debt: How Our Future Was Sold Out for Student Loans, Bad Jobs, NoBenefits, and Tax Cuts for Rich Geezers—And How to Fight Back (eBook, Kindle)

The Impoverishment of the American College Student (eBook)

Sold My Soul for a Student Loan (eBook)

Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required (eBook)


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The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.

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