Student loan debt — and default — will hurt home sales
14 Dec 2011
Posted by Andrew Kantor, Editor & Blogmaster []
According to a rather straightforward analysis by Rick Palacios of John Burns Real Estate Consulting, the massive amount of student debt held by America’s students and graduates — especially if they attended for-profit colleges or trade schools — will prevent many of them from buying a home for quite a while.
Check out the figures: American students owe about $865 billion — that’s more than the entire country’s credit card debt. (In fact, it’s more than every kind of debt other than mortgages.)
Further, default rates are rising, meaning getting a mortgage is going to be all but impossible. The Obama Administration has a program that is supposed to help get students’ debt payments down to only 10% of their income, but even that will likely disqualify them from a mortgage — if they could afford the payments, anyway.
So what does it mean? Two things: Rentals and parents.


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