Here is a really interesting article on CNN about the current state of student debt and how it impacts people in the home-buying process. According to a study by Trulia, saving for a 20% down payment is faster for people without a college degree as opposed to those with one. This was measured in 30 of the top 100 markets in the country. In these markets a household with a college degree is not making much more than one without a degree so when you factor in the student debt that college degrees tends to bring, is give an advantage to the non-degree holders.
Obviously one of the big drivers behind getting a college degree is chance to make more money over the course of their lifetime. These days this tends to pay off further on down the line because student loans are slowing down people’s ability to put money in their savings. When it comes to big life purchases like a home the initial down payment is the first major hurdle.
This is an interesting study, but in the grand scheme of things it remains to be seen how much people feel this is truly setting them back. In the markets where college degrees delay ones ability to make a down payment on a home the difference is only one year. When you factor in the likelihood of higher lifetime earnings this year might be something that most people don’t mind and are willing to take on. It all comes down to perspective and values.
If this gap continues to widen and begins to delay people from making their first down payment by three years of more then this is something that will begin to force people into making some more difficult choices. One year is probably not throwing anyones plans off a whole lot. This isn’t to say that this study is pointless, because it isn’t. This trend and the accumulation of student debt is one of the more serious economic issues that we are facing today and this is yet another part of life it is impacting.