On the campaign trail for the 2020 presidential election, one of then-candidate Joe Biden’s campaign promises was to eliminate $10,000 in student loan debt for borrowers in response to economic hardships caused by the pandemic.
Whether Biden delivers on that or not, student loan payments are a significant factor preventing many first-time homebuyers from the opportunity of building generational wealth. In today’s competitive housing market where home prices continue to skyrocket and interest rates hitting all-time highs, that opportunity continues to sway further away.
A 2021 report released by the National Association of Realtors, The Impact of Student Loan Debt found that student loan debt is one of the most significant hurdles for potential buyers and their ability to purchase a home.
In the report, when asked specifically about buying a home, half of non-homeowners said that student loan debt is causing their delay.
As a real estate professional, this is concerning for the long-term health of the housing market because a strong first-time homebuyer market is vital to maintaining longevity in the market.
With student loans ballooning to nearly $1.75 trillion and over 46 million Americans having student loans at an average balance of $37,000, a large portion of borrowers – particularly those under 45 and first-time homebuyers – can't save for a down payment or qualify for a mortgage due to the debt-to-income ratio.
If the barrier to homeownership continues to be more challenging for first-time homebuyers, my worry is this will create even more barriers for people looking to build equity and generational wealth while negatively impacting the overall health of the market. If we continue to lose a majority of our first-time homebuyers, in ten years, the market could shrink while millions of would-be-homeowners lose out on the lasting benefits of homeownership.
As a real estate professional, witnessing the ability of potential homebuyers being curtailed by student loans, I strongly support policy initiatives proposed by the National Association of Realtors (NAR) such as allowing student loan borrowers to refinance at lower interest rates. Moreover, providing tax relief to student borrowers and simplifying the federal loan system are effective proposals backed by NAR that will ensure a generation of would-be homebuyers are not priced out of the American dream for good while helping maintain a sustainable market where the economy and future generations thrive.
Cindy Stanton has nearly 25 years of real estate sales experience, and is currently Director of Sales and Principal Broker for Parks Real Estate, with 13 office locations and 850+ agents. From 2010 until 2016, Cindy served on the board of directors for the Greater Nashville REALTORS®. And, in 2015, was President of that board. In 2016, Cindy graduated from the exclusive Leadership Academy of the National Association of REALTORS®. She was also named 2016 Realtor of the Year for Greater Nashville REALTORS®.
