Young people are struggling to pay off their student loans. And for many, that means delaying other financial goals. Nearly half of current undergraduates with student loans plan to put off buying a home because of their student debt, a new survey from real estate site Clever found.
Just over 40% of these students say they'll have to delay saving for retirement as well.
In its 2019 Home Affordability Report, home co-investment company Unison found similar results: 83% of non-homeowners said student debt is the reason they can't afford to buy a home right now. Generally, they're delaying buying a house by around seven years as a result, the report found.
In fact, homeownership rates drop by 1.5 percentage points for every $1,000 increase in student debt, a 2017 study by the Federal Reserve found. That equates to an average delay of about two-and-a-half months, which can add up quickly for graduates with thousands or tens of thousands in loans.
For borrowers with $27,000 in student loans (the average amount of debt graduates of public four-year schools have) that equates to about a 5.6 year delay in homeownership.
It's unsurprising that debt is crippling graduates financially, especially considering that the cost of college is rapidly rising. For the 1987-1988 school year, students at public four-year institutions paid an average of $3,190 in tuition, according to College Board's "Trends in College Pricing 2017" report. But for the 2017-2018 school year, that average cost had risen to $9,970 — a nearly 213% increase.
Private colleges and universities are even more expensive. A 1989 graduate of Harvard University, for example, would have spent around $18,000 on tuition during their senior year. For the 2018-2019 school year, tuition costs $67,580. That marks a 275% increase.
College graduates not only have more debt than their predecessors, but smaller salaries as well. "Household incomes have remained more or less stagnant for bachelor's degree holders, which, coupled with high interest rates, has made it incredibly difficult for graduates to pay down their debt," Clever's report says.
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