• Yosi Rahimi

Student Loans keep millennials from buying their first home

The graph below isn't simple, take a few seconds to understand the implications on the economy. The bottom line, student loans keep US millennials off the housing market. 

The graph shows the difference between the average debt per capita (NYFed data) in 2015 vs 2003. It clearly shows how millennials (ages 23-38) have significantly more student loans debt and less mortgage debt, which can be attributed to delaying in buying their first house.


Another way to look at the data is by using the prism of all debt types in a wider age spectrum as shown in this NYFed post: https://libertystreeteconomics.newyorkfed.org/2016/02/the-graying-of-american-debt.html

You can see how the big increase in mortgage debt (left axis), that was present in 2003, is pushed to a later age by the big increase in student loans (right axis). This perspective also shows the increase in debt by older Americans 60+, some of them still paying for their student loans...

These debt trends happen while the economy is still booming with record low unemployment rates and low interest rates. Returning to the normal averages, let alone a financial crisis, could lead to a snowball of delinquency events that will cause a significant delay in economic recovery and in turn will reduce the ability of many to build their wealth for a sustainable retirement.

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