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Student Loans Not a Factor

While the U.S. home ownership rate has neared a half-century low, student debt is not the cause according to a new report by University of Michigan Economics Professor, Susan Dynarski. She debunks the commonly held theory that high levels of student (college) debt has created a drag on the housing market. She further disagrees with politicians, who are saying students help to ease the loan burdens. Her research suggests it is the college degree and its earnings premium over no-degree that helps build assets such as a home. Using Federal Reserve data comparing those with no college, those with college but no student debt, and those with both college and student debt, Dynarski notes that the main division between the home ownership “haves” and “have-nots” is their education level, not their debt. People with no college degree are more likely to own a home at an earlier age than those who went to college and accrued student debt, because they have been working since (graduation from) high school and settled down earlier, she points out, whereas their college-educated counterparts delay entering the labor force for college. However, the college-educated catch-up fast, and overtake the n0-college group in home ownership by age 27. By age 35, the gap in home ownership between those with and without college education is approximately 14%. “The college-educated, even those with student debt, are winners in our economy,” she concludes.

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