How Student Loan Debt Affects Millennial Home BuyersFebruary 26, 2019
College is more expensive than ever these days, which means a majority of millennial students were required to take out a loan in order to attend. However, it can take years before these loans are even half paid off. This burden is having a negative, far-reaching effect on the lives of these millennials. According to Student Loan Hero, people across the United States owe a total of 1.5 trillion dollars in student loans. Millennial home buyers are becoming less common because few are able to afford a home at this time.
Lower Home Ownership
The overall homeownership rates have been on a steady decline over the past 10 years. While the lack of millennial home buyers isn’t the sole reason, it is one of the significant contributing factors. To illustrate, among millennials aged 24 to 32, the homeownership rates have fallen from 45% in 2005 to 36% in 2014. About 400,000 people in this age group who were expected to be homeowners at this time are not because of student loan debt.
Diminishing Benefits of Education
Getting a college education is undoubtedly important. However, it should be more accessible to everyone regardless of their financial situation. The current cost to attend school is slowly diminishing the benefits of this education. Besides homeownership, student loan debt can be detrimental for a millennial’s credit score, making auto loans and credit cards harder to obtain.
What Can Be Done
While nothing can be done to immediately rectify this unfortunate burden, ensuring each payment is done promptly is a step in the right direction. Late payments are arguably the most frustrating way that one’s credit score can fall. To prevent this, set a reminder to make a payment each month before the deadline or set up automatic payments if available.
Furthermore, those with credit cards should reduce the amount they use it as much as possible. Credit card usage is something that mortgage lenders pay attention to, so try to keep the usage below 30%. Doing so will also help lower overall credit card debt.
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