Total Student Loan Debt Of $1.5 Trillion Is So High It Could Buy Every House on The U.S. Market Twice Over
Total student loan debt in the United States has reached $1.5 trillion. It’s now at a new all-time high according to a new study by realtor.com. That has realtors and housing experts concerned. Real estate agents across the US keep asking what does that mean for the housing market?
$1.5 trillion sounds like a lot. However, how much is it really when you break it down? Divided out, the average student loan borrower owes about $34,500, that’s $8,500 more than the typical down payment of $26,000. This is an average of 10% of the median home price of $260,000.
$1.5 trillion is enough to buy every single home on the market in the United States twice over.
Realtor.com Senior Economist George Ratiu told Housingwire:
Student debt has ballooned to an all-time high as the price of education continues to outpace wage growth. This is holding back many potential buyers from being able to purchase a home. Student debt is already impacting borrowers’ ability to buy a home and education debt is expected to hamper consumers’ financial decisions for many years down the road.
The Department of Education explained that wage growth is stagnant. However, education costs are rapidly increasing. Students are taking on more debt than ever before to cover their expenses. Since 1986, tuition at public universities has grown at four times the rate of wage growth.
Millennials make up nearly 34% of all student borrowers and hold about $498 billion in total student loan debt. They have an average balance of $33,000 per borrower. This is $7,000 more than the typical down payment on a median home.
The Federal Reserve estimated that about 20% of the decline in homeownership among young adults could be attributed to increased student loan debts since 2005.