Student Loans with Major Negative Impact on Mortgage Borrowing


A recent survey has revealed that near half of Americans find student debt to be a major hurdle to buying a home. The average amount of student debt has climbed dramatically over the past decade and this has had a negative impact on the mortgage market and the housing market. With student debt increasing and the credit standards becoming tighter, the affordability of homes for people who have gone to college may decrease even further.

Some 49% of the participants in a survey carried out by the National Association of Realtors stated student loan debt to be a huge obstacle to owning a home. While higher education is becoming more expensive with each passing year, the slowdown of the economy has affected negatively both the jobs available to young people and their pay. The average salary increases slowly especially in comparison to the prices of homes.

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The average student debt per borrower is currently over $33,000. For comparison, just five years back in 2009 it was just below $25,000. A decade ago the average graduate had to repay only $19,000. The average student debt has increased over two times since the beginning of the century. As graduates allocate a larger chunk of their salary towards the repayment of existing debt, they can save much less, if any, for a down payment. Their debt-to-income ratio is negatively affected and this is another hurdle to obtaining a mortgage loan and buying a house.

The quality of the student loan services is also put to question. The providers are blamed for setting obstacles towards the faster repayment of the loans and for charging too high fees for certain services. This puts more recent graduates at risk of late payments and defaults which will inevitably cause considerable damage to their credit scores.

While mortgage borrowing may increase in the coming years, the boost will most certainly not come from recent graduates.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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