"Every $1,000 in student loan debt delays homeownership by about 2.5 months, but it doesn't prevent homeownership entirely. In fact, by the time college grads reach their 30s, those with student loan debt have a homeownership rate nearly identical to those who didn't take out loans." - The Federal Reserve
The truth is that everyone, especially the younger generation, has student loan debt. The average student has about $40,000 in student loan debt. Since so many people have that debt, it levels the playing field for everyone.
There has been a slowdown in home sales to younger buyers, but those buyers are now finding themselves able to pay for a mortgage and a home.
Lower mortgage interest rates can help as well. These interest rates are so low that payment can drop by hundreds versus the rates that the student's parent paid for a similar mortgage.
In 2020, the largest number of Millennials will turn 30, a traditional turning point age for home ownership. Many have been paying on their student loan debts for 6 or 8 years already. That will allow them to have a settled credit rating and easily get a mortgage.
Many Millennials have prioritized paying off their student loan debts over almost every other consideration. Many will have their debt paid off in the next few years.
What to do if you have student loan debt
If you have a lot of student loan debt, there are a few things you can do to make it easier to get a mortgage:
- Always pay your debt. Never let your student loan debts go into default. There are a large number of payment plans that you can choose from.
- Consolidate your loans. It can be difficult to keep track of ten different loans from ten different lenders. The likelihood that you're going to miss a payment increases exponentially.
- Set up autopay. This will allow you to set it and forget it. That should make paying your debt easier and shows a long record of on-time payments on your credit report.
- Go easy with credit cards. Simply put, credit cards are very expensive money, often four or five times the rate of student loans. Pay off credit cards before you worry about paying off your student loan debt.