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Potential Home Buyers Hampered by Student Loan Debt

Since 2008, total student loan debt outstanding in the United States has grown 130 percent, to equal $1.5 trillion as of the second quarter of this year. Currently, student loan debt is responsible for 42 percent of all outstanding consumer debt.

The amount of student loan debt outstanding has risen 130 percent since 2008.

Student Loan Debt Impacting Home Ownership for an Increasing Number of People

These figures have been in the headlines for some time. A new survey, though, shows how much of an impact student loan amounts and debt service is having on homeownership. Simply put, student loan debt is impeding the move toward homeownership for a number of people across the country.

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The NeighborWorks America at Home survey, a poll of 1,000 adults that was recently conducted for the sixth consecutive year, found that 36 percent of all those surveyed indicate that either themselves or someone they know has put off buying a home because of student loan debt. Among the Millennial generation, who are currently aged 18 to 34, the number of people who knew someone who had delayed buying a home because of student loan debt rose to 59 percent. Fifty-seven percent of this group has student loan debt themselves.

The percentages are particularly notable given that homeownership was seen as a positive by a large majority of respondents. In fact, 92 percent rate homeownership a significant piece of the American dream, and 80 percent of all respondents think it augments financial stability. Among Millennials, just 68 percent thought that it hiked financial stability.

Fifty-nine percent of Millennials have put off purchasing a home because of student loan debt.

Affordability, Complexity Are Additional Concerns

As striking as the relationship between student loan debt and home buying were, other factors are impeding homeownership across the country, too.

The first factor was the price of renting. Sixty-two percent of all respondents felt high rent prices impacted the ability to purchase a home in their area. The number was higher, 65 percent, among people of color.

The second, and related, factor was the affordability for first-time buyers. Just 44 percent of overall survey respondents felt that their areas were affordable for this group.

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Third, many people perceived homebuying to be a very complicated process. Roughly 73 percent of respondents are delaying buying a home because of their feelings about the complexity — particularly notable given that the survey took place during a period of relatively low mortgage rates.

NeighborWorks America is a nonprofit dedicated to the education of potential homeowners. It suggests that more education may at least moderate the impact of the third factor, by demystifying the process of home purchases.

In addition, people concerned about the impact of student loan debt on their ability to purchase a home might benefit from education about the existence of potential lower interest rates and lower down payments on mortgages, and how to qualify for them.

Experienced Loan Sale Advisers Can Help Mortgage Lenders

The number of potential homebuyers holding off purchase due to rising student loan debt may result in a need for mortgage lenders to more effectively manage their assets in the future. Buying and selling mortgage portfolios can optimize portfolios by increasing profits and lessening risk.