Student Debt Is a Driver of Low Millennial Homeownership (Combined With Declining Middle Class Wealth)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

American homeownership has been on the decline (for millenials), and Federal Reserve researchers point to the high cost of college as one culprit. (Gee. ya think?)

Just 36 percent of household heads between 24 and 32 years old owned homes in 2014, down from 45 percent in 2005. At the same time, average student debt per capita rose to an inflation-adjusted $10,000 from $5,000 in 2005.

About 20 percent of the decline in homeownership among young adults can be attributed to that increase in student loan debt, the authors estimate, making such borrowing an important, but not central, driver of the decline. Some 400,000 more young people would have owned homes in 2014 if debt burdens hadn’t risen.

Average college tuition, fees, room, and board was $4,399 for public colleges in 1995-1996 and $2,081 for community colleges. By 2015-2016, costs were $9,410 and $3,435, respectively, increases of 53 percent and 65 percent. Student aid increases failed to slow down high tuition costs.

Why does this happen? It’s partly because higher student loans early in life leads to lower credit scores later in life, making it harder for former students to take out mortgages.

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But HOW did this happen? It started with President Bill Clinton and his crusade to make college more affordable. Clinton bumped up student financial assistance funding by 20 percent before he left office and introduced direct federal student loans, along with tax credits to further defray costs. Somewhat ironically, Clinton set the stage for student loans to dominate higher education funding.

And since Clinton, college tuition has grown almost exponentially. And then President Obama doubled down on the “make college more affordable” lunacy.

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Despite the fact that middle-class wealth has collapsed since 2007.

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Where do the tuition hikes go? Generally to university administrators, like Presidents, Provosts, Deans (and Deputy, Associate and Assistant Deans). And new non-academic initiatives. 

So where do (overpaid) university adminstrators go after work?  Bump City!

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Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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