Students Loans May Make It Harder For Young Adults To Buy Homes

Students loans are now posing an even bigger issue to young adults when the time comes to purchase a house even if it’s been many years since they were in school.

A recent study from the New York Federal Reserve shows that the amount of student loan in default saw an increase from 11.1% to 11.3% from October to December of 2014. The rate of loans in default has fluctuated within the last couple of years, but that does not negate the fact that it is still nearly two times as high as it was a decade ago.

The immense struggle many young graduates experience paying off their loans is suspected to be the culprit behind the the slowing in new home sales and construction over recent years. Adding to the speculation is the percentage of new, first time home buyers that is still coming in remarkably low.

Chief economist of Sterne Agee in Chicago, Lindsey Piegza told Market Watch, “We are seeing a shift to smaller units such as condos and co-ops.” She also notes that a lot of young adults are opting to rent homes rather than purchase them outright.

The high student loan rates doesn’t necessarily mean that college isn’t still a valuable tool to have as higher salaries and lower unemployment rates typically accompany a degree. However, the ability to manage and pay off the loans is something that needs to be considered when moving towards a diploma.