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Federal Reserve: Student Loans, not avocado toast, are a leading cause of low millennial home ownership

Sho_Nuff82

Sho_Nuff82

Member
Nov 14, 2017
18,456
https://thinkprogress.org/federal-reserve-student-debt-home-ownership-81dc87219d9f/
https://www.federalreserve.gov/publ...mmunity-context-201901.pdf?mod=article_inline

In a new report that confirms the obvious for many millennials, the Federal Reserve found that rising student debt — and not personal spending habits on things like avocado toast — is a key factor in preventing young people from buying homes, revealing that homeownership among young adults dropped 9 percentage points over the span of nearly 10 years.
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The Fed said it is likely that more than 20 percent of the overall decrease in homeownership among young people is due to student loan debt. "This represents over 400,000 young individuals who would have owned a home in 2014 had it not been for the rise in debt," the report stated.
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The high costs are exacerbated by the Trump administration's repeated efforts to roll back student protections, from aiming to rescind regulations that hold colleges accountable for saddling students with more debt that they can handle, lowering standards for student loan servicers, and dismantling an Education Department team in charge of investigating for-profit colleges, to name a few.
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Demand a liberal arts degree for thread-posting privileges if old.
 
ChrisR

ChrisR

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Oct 26, 2017
6,803
I don't have any debt, but I don't make enough to buy a house in the current market.
 
PanickyFool

PanickyFool

Banned
Oct 25, 2017
5,947
Average Student Loan Monthly Payment: $351
-While it is a pain-in-the-ass, that payment is not the reason Millennial are not buying homes.

It is simply the cost of purchase (because of limited supply).
 
wenis

wenis

Member
Oct 25, 2017
16,120
more like millenicantaffordanythingbecauseiwastoldineededtodothistobeasuccessfuladultbutreallymyentireadultexistenceispredicatedonahugefuckinglieandicouldvegottentowhereiaminlifewithoutbecomingwildlyindebttoafuckingschool.
 
FaceHugger

FaceHugger

Banned
Oct 27, 2017
13,949
USA
No meaningful regulation of the housing market doesn't help either. "Values" swinging around wildly. Banks that caused the meltdown in the first place are now snapping up properties and renting them back out at exorbitant rates. Overseas investors (and just bored rich people) buying real estate all over the place and not living in it.

Already having a lot of debt is bad, but when the market is a wild west shitshow the problem is compounded.
 

Deleted member 17388

User requested account closure
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Oct 27, 2017
12,994
Zq0iBJK.jpg
 
Isak_Borg

Isak_Borg

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Oct 30, 2017
578
I'm surprised predatory loan practices are the reason young people don't engage in home ownership.

Fuck these capitalist pigs.
 
Version 3.0

Version 3.0

Member
Oct 27, 2017
11,214
If that's #1, then #2 is simply price. I don't know any millenials who could afford a home (within reasonable commute distance) even if they were debt-free.
 
Zoph

Zoph

Member
Oct 25, 2017
2,516
I could have put a down payment on a home four times over by now were it not for ten years of student loan payments.
 
ZealousD

ZealousD

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Oct 25, 2017
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If you lazy millennials just got a degree, you wouldn't have to worry about student loans! Everybody knows that to get a job, you just need a degree!
 
Alvis

Alvis

Saw the truth behind the copied door
Member
Oct 25, 2017
11,237
Spain
I don't understand the concept of student debt. Aren't there scholarships in the USA? Here in Spain for example you ask for the scholarship, and if you get it (if you/your family don't make a lot of money you get it basically) you don't pay for the university and they give you money every year of the degree, which you get to keep as long as you pass. Doesn't it work like that there? What is student debt? Are you always supposed to return the money?
 

xnipx

Banned
Oct 30, 2017
142
PanickyFool said:
Average Student Loan Monthly Payment: $351
-While it is a pain-in-the-ass, that payment is not the reason Millennial are not buying homes.

It is simply the cost of purchase (because of limited supply).
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The problem with this is that to use the most flexible loan option(FHA) for people with challenged credit/high debt to income ratios. We have to use 1% of the balance to calculate your payment liability. So for example you may be paying $351 per month for $70,000 in debt but we have to hit you with a $700 payment. This is a new change, previously we would use whatever was on the credit report, or if in deferrment no payment at all. Somebody in the industry thought it was a bad idea to do it this way and lobbied to get it removed.
 
Pooh

Pooh

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Oct 25, 2017
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The Hundred Acre Wood
I would easily have a house payment down by now if not for student loans. I probably wouldn't have needed medication for anxiety and depression either but that's another story.

Xharos said:
I don't understand the concept of student debt. Aren't there scholarships in the USA? Here in Spain for example you ask for the scholarship, and if you get it (if you/your family don't make a lot of money you get it basically) you don't pay for the university and they give you money every year of the degree, which you get to keep as long as you pass. Doesn't it work like that there? What is student debt? Are you always supposed to return the money you get to study?
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Scholarships are given by the universities themselves and you don't have to pay them back. But those are comparatively rare to student loans.

If you take out student loans you have to pay them back. There are even privately-financed student loans which are basically the worst loans in the world to have (I know from experience).

With the government guaranteeing student loans and giving incentives to providers to loan out as much as possible, universities could raise tuition through the roof since "you have to get a degree to get a good job."

Here's a good video of Adam Ruins Everything that explains it, only about 5 minutes long: https://www.youtube.com/watch?v=PE66HEZBZYE
 
Zoph

Zoph

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Oct 25, 2017
2,516
Xharos said:
I don't understand the concept of student debt. Aren't there scholarships in the USA? Here in Spain for example you ask for the scholarship, and if you get it (if you/your family don't make a lot of money you get it basically) you don't pay for the university and they give you money every year of the degree, which you get to keep as long as you pass. Doesn't it work like that there? What is student debt? Are you always supposed to return the money?
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A year of college in the United States can easily cost $15,000 even at an affordable public university.
 
Ferrio

Ferrio

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Oct 25, 2017
18,097
Xharos said:
I don't understand the concept of student debt. Aren't there scholarships in the USA? Here in Spain for example you ask for the scholarship, and if you get it (if you/your family don't make a lot of money you get it basically) you don't pay for the university and they give you money every year of the degree, which you get to keep as long as you pass. Doesn't it work like that there? What is student debt? Are you always supposed to return the money you get to study?
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There's scholarships, but not enough to go around and they rarely cover the whole cost unless you are an exceptional student. Most people take loans from private lenders or the government, during a time when they're too young to understand the implications. You don't have to pay it off during college, and a lot of the time it's interest free too. Once you stop attending school you gotta start paying it back and interest kicks in. Not returning the money is bad, interest will grow and the lenders will come after your ass.
 
Atomic Playboy

Atomic Playboy

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Oct 27, 2017
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Portland, OR
How about individual wages typically not being enough to sustain a family so you end up with both parents working, which necessitates childcare, which is ungodly expensive? I feel like that's a pretty common complaint for people in their late-20s, early-30s. That, in conjunction with the fact that even the most menial of office jobs now requires at least some higher education (for no explicable reason), and you get people stuck in a debt trap who are never going to be able to qualify for a home loan.
 

Deleted member 17092

User requested account closure
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Oct 27, 2017
20,360
Fucking duh. When your loan payments are as much or more than half of a typical mortgage, it makes it hard to save any money and also pay rent. So no one has a down payment.
 
smurfx

smurfx

Member
Oct 25, 2017
10,578
who would have thought that soaring prices at schools would fuck over a giant portion of a generation.
 
Casualcore

Casualcore

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Jul 25, 2018
1,303
PanickyFool said:
Average Student Loan Monthly Payment: $351
-While it is a pain-in-the-ass, that payment is not the reason Millennial are not buying homes.

It is simply the cost of purchase (because of limited supply).
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I don't know. What's the difference between the price of rent and the price of a reasonable mortgage? When we moved over, our monthly payment went from $1500 a month rent to $1700 a month mortgage.

We'd have spent a decade saving up the down payment, if my father-in-law hadn't died and left some money. Even then, I'm barely a millenial, based on the year guidelines. We both had some knocks in life and were starting over along with the millenials starting for the first time.
 
Lifendz

Lifendz

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Oct 27, 2017
2,391
No shit. If only there had been protections in place to keep young people from destroying their credit and potential to own a home.
 

Deleted member 8741

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I got lucky and went through school with a ton of scholarships. I worked a lot in high school and college too and save almost all of it. Even then, we had to save some to get a home and it's not an expensive house relatively.

No we make good money, but my wife and I are still paying off some of her grad school loan. That alone was $40,000.
 
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