Information from the Student Loan Hero, about 45 million people in the U.S. have student loan debt with the average debt of over $30,000. Roughly a fifth of borrowers owe over $100,000 in debt.
A monthly student loan payment can eat up a good chunk of a person’s income, making it impossible to save for a down payment and pushing their credit scores down. With every 10 percent of student loan debt, a borrower’s chance of owning a home declines two percentage points.
Over 80 percent of people, aged 22 to 35 with student loan debt, have not bought a home yet and blame their higher education loans for it.
Simply put, having student loan debt is a major obstacle in owning a home in the U.S.
National Association of Realtor Managing Director of Survey Jessica Lautz said people with student loan debt do what to own a home, but it’s difficult to do at the moment. What are the challenges student loan borrowers tend to face?
One-fifth of student loan borrowers are decline for a home loan because they have a high debt-to-income ratio. This ratio look at what people owe compared to their annual income.
According to Harvard Joint Center analysts, the average income for higher education borrower is close to $60,000.
Cardinal Retirement Planning Certified Financial Planner Doug Amis said banks look at student loan debt as an unsecured debt. There’s no way to foreclose on a person’s education like a house or car.
80 percent of borrowers are unable to get a loan due to their credit score. It’s hard for many people, especially those who owe an excessive amount of money to the bank, to pay back the loan. This causes them to fall behind on their payments, with their credit scores tanking because of the missed payments.
Most student loan borrowers have a hard time-saving money to put on a down payment, as home prices have skyrocketed to a median of $240,000 a year. In fact, many of them are living paycheck to paycheck. Even if money is saved, something happens, and they have to use that money for something else.