If you have teens preparing to embark on their college years or even ones already frolicking or lallygagging around a college campus, your pocketbook likely isn’t busting at the seams nor are you surprised about the dramatic increase in the cost to obtain a higher education. For those less familiar with the wild increase, the cost of attending a public university has drastically changed over the past 20 years. The annual cost for a public and private university education has gradually shifted over the last two decades with a year of education costing the following:
- 1996 Public Annual Cost: $4,400 and 1996 Private Annual Cost: $19,000
- 2006 Public Annual Cost $7,000 and 2006 Private Annual Cost: $25,000
- 2016 Public Annual Cost $9,500 and 2016 Private Annual Cost: $32,000
Yes, OUCH is one descriptive word that could be used when describing this upset to your finances. We could argue for days about why this upswing has occurred and let’s just settle on one of the more obvious reason which is inflation so we may circle back around to the impact of student loan debt as it relates to housing.
Due to the increased cost, parents are less likely to want to or be financially able to foot the entire bill or even a portion of the bill for a brief college stint. As a result, students are seeking alternative solutions to ensure they wind up with a college degree. These alternative solutions can include scholarships both full and partial, financial aid or a student loan for all or a portion of the financial need. Due rising costs, the last option solution is becoming more the norm and is current wrecking a bit of havoc on housing industry, including impacts of the local economy.
Let’s fast forward through the glorious college years, even we could teleport ourselves back there and relieve a few moments. Once college is over and you’ve graced the stage to accept your diploma, the natural next steps are normally one or a few of the following: land a wickedly awesome job in your field of study, buy a home and furnishings and perhaps even work towards creating your own family. While the first step is a requirement to achieve the latter two, we as real estate professionals are seeing the latter two being achieved in no particular order. Real estate professionals across the country are witnessing recent college graduates, often referred to as millennials, be slower to achieve their homeownership dreams then previous generations. For a number of years media outlets hinted that millennials were unable to land jobs due to the downturn of the economy, there has never been until recently major discussions surrounding the impact on student loan debt and how it will impact housing or local economies.
The impact of student loan debt on hosing was discussed in great detail during the REALTORS® Regulatory Issues Forum at the National Association of REALTORS® Legislative Meeting today. Mabél Guzmán, a REALTOR® with @Properties in Chicago and the REALTOR® Chairman for the Student Loan Debt Work Group was a panelist and contributed,
“For cxample in Illinois when someone buys a home or condo, we have found an additional $17k goes into the local economy. Student loan debt is delaying recent graduates from buying a home by three years for a male and five years for a female. This economic pressure is keeping these potential homeowners from moving forward with their lives, whether it be a car purchase or more specifically housing. This delay is a drag on housing recovery and this also impacts local economies because as a result no direct or indirect dollars being spent after a home purchase.”
(Annual Cost Source College Board)