Imagine not being able to afford a house of your own because the financial burden of student loans prevents you from saving for a down payment. This is the unfortunate reality is that many students face since the income they earn after they graduate college isn’t sufficient from to both pay down their student loans and start saving for a house. An article from MarketWatch highlights how student debt has impacted the quality of life for many Millennials, and infers how homeownership is just the tip of the iceberg when it comes to what else graduates cannot afford as they look into long-term investing.

The most distressing part of the article was the following:

“Some 85% of respondents said they have not been able to save for a down payment because of their student loans. Additionally, nearly three-quarters of people said they’re putting off buying [a house] because their student debt makes them feel too financially insecure. More than half (52%) of respondents also said that they can’t qualify for a mortgage because of their debt-to-income ratio” (Market Watch).

The aforementioned isn’t to say that Millennials are totally incapable of buying homes; rather, the student debt they’ve incurred has been such a setback for them that they can’t afford to be homeowners at the moment. In fact, the research found that student debt was leading them to postpone purchases for seven years when compared to earlier generations. Many college graduates have made the executive decision to move back home—a touchy subject, as the media has both hounded and encouraged Millennials on the subject of relocating back to their parents’ houses.

Nowadays, it seems like slim pickings for college graduates as the debt they’ve incurred is hindering a majority of them from putting their income towards long-term investments such as buying a house. This Student Loan Debt and Housing Report just reiterates how much Millennials are financially struggling. The phrase “student loans” haunts many students already, not to mention the increasing amount of graduates defaulting on their loans.

The good news is there is a solution...education! As our recent research report shows there are hundreds of teacher all over the country who have advocated successfully to make personal finance a graduation requirement (even in states that don't mandate it!). This course needs to include lessons and activities about paying for college. We also created a game PAYBACK with ad agency, McKinney, to help high school students see the long-term consequences of their financial decisions. 

Questions:

• Do you feel as if you’re financially equipped and mentally prepared to take on the student loans you may incur in the future? Why or why not?
• Where do you stand on the much debated phrase: “Millennials can’t afford to buy homes because they keep spending their money on avocado toast?”
• What do you predict will happen to the national economy if students continue to postpone household payments?

…

Be sure to check out this older blog post, which has a chart detailing how much homeownership has changed in the U.S.

picture credit: http://realtybiznews.com/the-battle-at-the-for-sale-sign-are-you-losing-real-estate-leads/98733911/

About the Author

Danielle Bautista

Danielle is a native of Southern California and a recent graduate from the University of Maine, where she braved the frigid winters—a feat in and of itself—and earned her Bachelor's degree in International Affairs. She has a passion for working with non-profit organizations and serving populations in underprivileged communities. When Danielle isn't writing NGPF blog posts, spearheading various outreach projects, or managing contests and flash surveys, you can find her doing some sort of outdoor activity, learning a new hobby, or cracking what she thinks are witty puns!

More posts by Danielle