Student-Loan Burdens Upend the American Homeownership Dream

A central part of the “American Dream” is to buy a house, pay it off over time and retire with hundreds of thousands of dollars of equity in the home.

Student-loan burdens are upending this scenario, according to a study from the Jain Family Institute that found the rise in student debt has become a major obstacle to purchasing a home -- especially among relatively high-income young borrowers.

The research brings into question the value of a college degree. For young adults earning $100,000 or more, higher student debt corresponds with lower homeownership in each year of the 10-year study.

Overall, the rate of homeownership among student borrowers age 18 to 35 has dropped 24% in the decade through 2019, the report shows. People living in Black and Asian communities saw the biggest declines -- even as they started with the lowest rates back in 2009.

Owning a home has traditionally played a key role in building financial security for millions of Americans. In 2019, homeowners had a median net worth of $255,000, compared with $6,300 for renters or others, according to a 2020 Survey of Consumer Finances from the Federal Reserve.

Researcher Eduard Nilaj, author of the Jain report, said by email that the freeze in student-loan payments since the beginning of the pandemic -- recently extended by another three months -- may have enabled some mid- and high-income student-loan borrowers to buy a home. But the surge in house prices has also been a deterrent.