student-debt-us-housing-market Photo: Josh Thompson/Flickr

The cost of higher education is getting in the way of many Americans’ plans to graduate to homeownership, a recent joint survey from the National Association of Realtors (NAR) and non-profit org American Student Assistance suggests.

According to the survey of 3,230 student loan borrowers in the US who are currently paying down their debt, 71 percent say this expense is hampering their ability to buy their first place of their own.

The debt these respondents have taken on varies widely, but NAR says most commonly the amount falls in the $20,000-$30,000 range.

Some 43 percent of respondents had racked up debt from $10,001 to $40,000, while 38 percent owed at least $50,000, according to the survey.

Lawrence Yun, NAR’s chief economist, highlights how if not for student debt, most non-homeowners surveyed could actually take on the cost of ownership — at least based on income.

“A majority of non-homeowners in the survey earning over $50,000 a year — which is above the median U.S. qualifying income needed to buy a single-family home — reported that student debt is hurting their ability to save for a down payment,” says Lawrence Yun, NAR’s chief economist, in a statement.

“Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase,” he adds.

Most (52 percent) of non-homeowners foresee their student debt keeping homeownership out of reach for them for over five years.

As for exactly how the debt is dashing immediate homeownership plans, more than three quarters of non-homeowners polled say the monthly payments make it so they can’t put away enough money for a downpayment.

What’s more, the debt has left 69 percent feeling too financially unstable to buy, and 63 percent have debt-to-income ratios that are pushed up too high via their outstanding student-loan balances to qualify for a mortgage.

But student debt is not only affecting non-homeowners. Among those borrowers who have already managed to purchase their own homes, 31 percent say their debt stands in the way of plans to sell and purchase another.

For 18 percent of these indebted homeowners, upgrading by moving into another home is too costly. For 7 percent, student debt has compromised their credit, and 6 percent are having trouble covering more than minimum mortgage payments.

This is limiting the number of new listings on the market, says NAR.

In a statement, SALT, an American Student Assistance program, called on post-secondary institutions, the government and private sector to take action to aid the 43 million Americans saddled with student debt, citing the importance of this for the US economy.

“No one should fail to realize the full potential of their formal education simply because of finances,” says John Zurick, president of SALT, which helped roll out the survey.

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