College Drives Homeownership (Even with Debt)
It’s become quite popular to blame student debt for holding back young adults’ abilities to own homes. But the debate on student debt and homeownership tends to err in focusing on the detriments of student debt, rather than the benefits that come with having a college education. Of course, debt being in and of itself burdensome is — if not a universally-accepted premise — at least an easy point to make in reference to college. There are plenty of student loan borrowers who are struggling.
But the ‘is college worth it’ debate shouldn’t stop there. For one, the additional earnings awarded to those with a college education enable graduates to do things they might not be able to if they hadn’t gone to college.
New research by Brookings fellow and higher ed expert Susan Dynarski confirms that the value of college extends to one’s ability to own a home — even among those who owe student loans. As displayed in the chart below, those holding a college degree are much more likely to own a home, not only early in adulthood, but later on as well.
Most important to note is that by age 26, even college grads with student debt are more likely to own a home than those who never attended college. As one may suspect though, student debt does appear to delay homeownership after college. In the prime student loan repayment years starting at age 23, grads with student debt lag in homeownership behind graduates who never borrowed student loans. By age 34, this difference is closed considerably, presumably because the standard repayment term for student loans is 10 years.
But what about LRAP? First, LRAP provides the peace of mind many students need to persist and graduate from their college of choice. Second, the student loan repayment assistance that LRAP provides is often the help budding college graduates need to pursue their dreams after graduation. With student loan payments kept in check, grads may even be more able to purchase a home.
Even without LRAP assistance, one thing is clear – having a college education pays huge dividends when it comes to homeownership.