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Student Debt Delaying 30% of Millennial Home Purchases

by Peter Thomas Ricci

Student debt remains the leading roadblock to Millennial homeownership

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Fifty-six percent of people between 18 and 29 have put off a major life event because of student loan debt, according to a survey released by Bankrate.com. That is higher than the average of 45 percent of all Americans with student loan debt.

The survey, which asked 1,000 current and former students about their financial situation, saw 30 percent of people between 18 and 29 delay purchasing a home because of unpaid student debt. Twenty-nine percent delayed buying a car, 19 percent delayed getting married, 18 percent delayed saving for retirement and 14 percent delayed having kids.

Obstacles to Millennial Homeownership

Chicago Agent has been reporting on the difficulties of Millennial homeownership for some time:

  • According to the Federal Reserve Bank of New York, in 48 states, between 20 and 30 percent of 25-year-olds live at home; for 12 states, the “parental co-residence rate,” as the Fed calls it, has exceeded 50 percent.
  • Wage growth remains slow. According to the latest jobs report for July, hourly wages increased five cents, or 2.1 percent. That barely outpaced inflation, and other research suggests that wages for Millennials have actually fallen in recent years.
  • Perhaps because of those weaker wages, 31.5 percent of Americans with student debt are delinquent on their loans, and additional research from the Federal Reserve Bank of New York has found that 11.5 percent of outstanding student debt is seriously delinquent; that’s up from 10.9 percent a year ago, and far above the national average for total household debt, which is 3.98 percent, its lowest level since 2007.

Thomas Scanlon, a financial adviser with Raymond James Financial, summed up the dilemma in Bankrate’s study.

“Live at home for as long as you and your parents can stand it,” he said. “With student debt, a car loan, cellphone bill, car insurance and some spending money, most of the paycheck is gone. Live at home and save the rent.”

Some Millennials, however, are still buying homes. According to the National Association of Realtors, Millennials accounted for 32 percent of all home purchases in 2014, the most of any generation.

James Bellandi also contributed reporting to this story.

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