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Student Debt Affects Homeownership

Over the past decade, the amount college graduates owe in student loans has increased dramatically– specifically, from about 260 billion dollars in 2003 to nearly 1.3 trillion dollars this year.

For many, the American dream includes graduating from college, getting a job and eventually becoming a homeowner. However, the rise in college debt has many questioning if getting a college degree is actually worth the financial risk.

University of Kansas alumnus Nick Logan owes about $60,000 in student loans. That makes his payments nearly $600 a month.

“I grew up with a single mom, and we lived paycheck to paycheck. Her answer was, ‘If you don’t want to live like this, get a college education.’ Right. So you get a college education. You get excited and graduate, and get a decent job. And you start paying these student loans off, and you are still living paycheck to paycheck,” Logan said. “How is that not frustrating?”

Student loan debt may be a key factor in the decline of home ownership among young adults. Fairway Mortgage Loan Officer Diane Fry said individuals in their 30’s can’t even buy houses, a primary way American households build wealth, because of their college debt.

“Let’s say someone graduates from college, and they are making $50,000 a year but have $100,000 in student loan debt,” Fry said. “Well, they don’t qualify for a payment. I mean they don’t qualify at all. It is shocking to them, and it is happening more than you would believe.”

Fry says student loans have become a much bigger issue than it was two years ago. Mortgage interest rates are at an all time low, making home buying less expensive.