Housing Expert Forum: The Impact of Student Loan Debt on the Housing Market

Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic.

Guest posts are shared regularly with Housing Commissioners to help inform their work.

Have a pressing question you’d like us to consider? Please leave it in the comments section. We encourage you and our expert bloggers to add comments, contributing to the national dialogue on solutions for the future of the housing sector.

Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.

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QUESTION: Americans now hold close to $1.2 trillion in outstanding student loan debt making it the second largest form of consumer debt after home mortgages. What are the implications for housing markets, household formation, and economic mobility for the next generation? Are there creative approaches to reduce the burden?

All-of-the-Above Approach Needed to Counter Impact of Student Debt
By Kent Watkins

Although many who took out student debt were the normal new so-called Echo generation entering that phase of their life, others, who had stumbled in the latest economic recession and the overall change in our structured economy itself (lower wages, e.g.), had sought to re-invent themselves by attending schools of all stripes, so long as they were able to put off the bill until later.

Read the full post here.

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The Subprime Education Crisis
By David A. Smith

Remember the subprime housing crisis? Now we have a subprime education crisis. This one is worse in two ways: asset-value recovery and a flawed governance model that is simply making the problem worse.

Read the full post here.

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Tie Loan Payments to Employment Situations
By Conrad Egan

Student loans taken by optimistic and naive borrowers in anticipation of future increased job prospects, which often don’t occur, are now dragging down the economic recovery, hindering home purchases, and demanding outrageous payments for decades to come.

Read the full post here.

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Does Public Policy Encourage Poor Choices?
By Mark Calabria

More than any other group, the great housing boom and bust of the 2000s was driven by younger households. At the previous bottom in 1995, the homeownership rate of households under 25 was just under 16 percent. This figure soared to almost 26 percent by 2005. By comparison households aged 50 to 54 saw their rate of homeownership increase by just over a single percentage point during this time.

Read the full post here.

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Tight Regulatory Environment, Rising Student debt Hinder First-Time Homebuyers
By Charlie Dawson

As our housing market continues to heal from the economic crisis of the last several years, current and prospective homeowners are faced with the reality of an increasingly tight regulatory space that is contributing to a constriction of credit in the housing finance area. Rising student debt may impact consumer access to mortgage credit, their ability to save for down payments, and more broadly, attain homeownership.

Read the full post here.

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Student Debt Stalling Promise of Homeownership for Younger Generations
By Stephen Banko

Like everything else in this increasingly polarized country, opinions vary about the impact of student loan debt on homeownership. But one thing is vividly clear – with the average loan debt per student hitting $33,000 this year, it can’t be a good thing for most students pining for their own place.

Read the full post here.

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Increasing Student Debt Yet Another Reason for Balanced Housing Policy
By Michael Spotts

The number of households aged 25-34 with student debt increased by 50 percent from 2001-2010, ending the decade with nearly four in ten households with student loans. Though taking on student debt is often an all-too-necessary part of obtaining higher education, when it leads to a completed degree it can be a pathway to increased earning potential over a lifetime. However, the share of this age group with at least $50,000 in student debt has more than tripled—at a time in which average earnings for young college graduates have fallen by more than 15 percent since 2000.

Read the full post here.

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Past Forums

June 2014: How have shared equity housing models created positive impacts on the supply of affordable housing?

February 2014: What are the most promising opportunities to promote greater residential energy efficiency? Is there a role for the federal government?

December 2013: What opportunities and challenges will immigration reform pose for future housing demand, housing markets, and/or economic revitalization?

October 2013: This month marks the 27th anniversary of the federal Low Income Housing Tax Credit (LIHTC) program. Throughout the program’s tenure, what lessons have we learned? What key components continue to make it a successful program?

July 2013: Who are unconventional stakeholders who can help rally support for housing?

May 2013: What should the federal government’s role be in helping prepare consumers to make financial decisions?

April 2013: Which of the recommendations in the BPC Housing Commission’s report should receive highest priority?

November 2012: What have we learned from past disaster recovery efforts that could be applied in the way of housing assistance following Hurricane Sandy?

October 2012: What should be the interaction (if any) between state and local policies that impact housing availability and affordability?

September 2012: What statement(s) related to housing—policy, or otherwise—would you want to hear in the presidential debates?

August 2012: What is the role of housing education and counseling in the future housing economy and finance system?

July 2012: Do alternative forms of homeownership, such as shared equity models and rent-to-own programs, present viable alternatives for future homeownership?

June 2012: What are the best options for the millions of single-family homes that may be left behind by Baby Boomers as they age, many of which are in suburban or exurban communities?

May 2012: What can we learn from current or previous efforts to link evidence-based outcomes to policy or program development?

April 2012: What lessons can the U.S. learn from housing programs, policies, or regulatory frameworks in other countries?

March 2012: How can housing policy be responsive to today’s urgent needs and simultaneously address long-term trends?

February 2012: What are some of the key characteristics of a healthy housing system? And how can the success of these features be measured?

January 2012: What should the federal government do to address the inventory of foreclosed properties?

December 2011: What are the most pressing issues in housing policy today?