Study shows student loan forgiveness plan would boost Millennial homebuying options

June 6, 2019 - 2 min read

The power of debt forgiveness

Politicians have been tossing around the idea of student debt forgiveness for years. Though an official policy has yet to be passed, new data shows it would be monumental for Millennial homebuying prospects if enacted.

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Hastening homebuying

According to a new analysis from Redfin, forgiving $50,000 in student loan debt (Sen. Elizabeth Warren’s current plan) would make Millennial homebuying significantly easier. Without student debt to contend with, Millennials could buy a home three years faster, on average.

Redfin’s data shows it currently takes the average Millennial 12.3 years to pay off their student loans and save up enough for a 20 percent down payment on a median-priced house. With $50,000 less in loan debt, it would take them just 9.4 years.

It would also have a huge impact on housing in general. As Daryl Faithexxrweather, Redfin’s chief economist explains, “The idea of taking on a mortgage when you’re still paying off tens of thousands of dollars in student loans is a non-starter for many people. If student debt were eliminated, college grads would be able to start building wealth through homeownership, laying down roots and contributing to their communities years earlier in their lives. An influx of young, educated homeowners could have positive impacts on neighborhoods and society at large.”

6 ways to buy a home without paying off your student loans

Where Millennials would benefit the most

The impact would be even bigger in certain parts of the country. In Memphis, for example, student loan forgiveness would shave 4.3 years off the homebuying process.

Millennials in Birmingham, Alabama, would also be able to buy a home four years sooner if they had $50,000 less in debt.

Millennials outrank Boomers on recent mortgages

The cities where debt forgiveness would impact Millennial homebuying the least are higher-priced ones along the West Coast. In San Francisco, it would save buyers 1.6 years, while in San Jose, it would mean just 1.2 years saved.

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Aly J. Yale
Authored By: Aly J. Yale
The Mortgage Reports contributor
Aly J. Yale is a mortgage and real estate writer based in Houston who has contributed to Forbes and worked for organizations such as The Dallas Morning News, PBS, NBC, and Radio Disney.