The Relationship Between Student Loan Debt and Financial Wellness

Abstract This article analyses the interaction between two policy areas affecting young people in England – housing and student funding. It is the first of its kind exploring a range of dynamics in the relationship between housing and student loan debt. Young people today are far less likely to own their home and are more likely to live with their parents than earlier generations. In parallel, higher education tuition fee increases have led to a growing share of students taking out loans and graduating with higher debt, which they will be repaying for most of their working lives. This research examines the relationship between student loans – having borrowed for higher education and attitudes towards debt – and housing tenure at age 25, using the Next Steps dataset. We find that young graduates who did not borrow for higher education are more likely to own their home and less likely to rent or live with their parents than graduates who borrowed for their studies or young people who never attended higher education. These results suggest that higher education funding policies and student loan debt play important roles in structuring young people’s housing in England.

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The Effect of Loans on Students' Degree Attainment: Differences by Student and Institutional Characteristics

Harvard Educational Review ◽

10.17763/haer.77.1.n14t69l0q8292784 ◽

2007 ◽

Vol 77 (1) ◽

pp. 64-100 ◽

Cited By ~ 46

Author(s):

DONGBIN KIM

Keyword(s):

Financial Aid ◽

Degree Completion ◽

Low Income ◽

Degree Attainment ◽

Student Loan ◽

Institutional Characteristics ◽

Student Loan Debt ◽

Loan Debt ◽

The Relationship ◽

Racial Ethnic

In this article, Dongbin Kim investigates the relationship between undergraduate student loan debt and degree attainment. Using data from the Beginning Postsecondary Student (BPS) surveys in 1995–1996 and 2000–2001, she examines whether the relationship between debt and degree attainment is different for students with different parental income levels or racial/ethnic backgrounds, and for students attending different types of higher education institutions. Controlling for a range of individual and institutional characteristics, Kim uses hierarchical generalized linear modeling to find that higher student loan debt in the first year of college is associated with lower probabilities of degree completion among low-income and Black students. Her findings suggest that students' increased reliance on loans for financial aid may widen the income and racial/ethnic gaps in degree completion, despite the fact that a primary goal of financial aid is to narrow those gaps.

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6 Ways to Pay Off Student Loan Debt Faster

PsycEXTRA Dataset ◽

10.1037/e509252018-001 ◽

2018 ◽

Author(s):

Bobby Hoyt

Keyword(s):

Student Loan ◽

Student Loan Debt ◽

Loan Debt

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How to Aggressively Pay Off Student Loan Debt After College

PsycEXTRA Dataset ◽

10.1037/e514042018-001 ◽

2017 ◽

Author(s):

Bobby Hoyt

Keyword(s):

Student Loan ◽

Student Loan Debt ◽

Loan Debt

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Student loan debt and first-time home buying in USA

International Journal of Housing Markets and Analysis ◽

10.1108/ijhma-09-2020-0118 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Robert H. Scott III ◽

Steven Bloom

Keyword(s):

College Graduates ◽

Student Loans ◽

Student Loan ◽

Home Equity ◽

Student Loan Debt ◽

Content Type ◽

Loan Debt ◽

The Usa ◽

First Time ◽

Home Buying

Purpose This paper aims to examine the relationship between student loan debt and first-time home buying among college graduates aged 23 to 40 years old in the USA. Design/methodology/approach The authors use the Federal Reserve’s 2019 Survey of Consumer Finances data on American households to present descriptive statistics and run logistic regressions that measure the effects of student loan debt on first-time home buying. The authors also present original survey data of mortgage lenders that provides an industry-level perspective. Findings The authors find that having student loan debt does not by itself prohibit first-time home buyers. On the contrary, having student loan debt increases the likelihood of homeownership by 15.1%. People with student loan debt, however, buy homes that are 39.2% less expensive and have 58% less home equity compared to first-time home buyers without student loans. In addition, it is found that the amount of student loan debt is important. People with student loan debt above the median amount among people with student loan debt ($35,000) are 27% less likely to be first-time home buyers. Practical implications This paper provides public policy analysts and other researchers a different perspective on the correlation between student loan debt and home buying. This study focuses narrowly on first-time home buyers who are college graduates between 23 and 40 years. Thus, capturing the youngest cohort of first-time home buyers and examine the primary factors that influence their home buying decisions. Originality/value First-time homebuyers are historically the largest segment of home buyers making them an important subcategory to study. The rise in student loan debt is posited to explain declining homeownership among younger people. The current literature on student loan debt and home buying often studies samples that are too heterogeneous resulting in mixed findings. This paper adds to the existing literature by filtering the sample to study the effects of student loan debt and first-time home buying among people with at least a college degree who are between 23 and 40 years.

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