“Is student debt hampering the housing recovery?” No, says Dynarski in Brookings

May 4, 2016

“The striking gap in homeownership is not between college-educated people who did and did not borrow, but between those with and without a college education,” writes Susan Dynarski in “The dividing line between haves and have-nots in homeownership: Education, not student debt.”

Dynarski’s article appears in Evidence Speaks, a weekly publication of the Brookings Institution's Center on Children and Families.

“There is widespread concern that student loans are a drag on the housing market,” Dynarski writes in the piece. Many of those concerns rely on analyses by the Federal Reserve Bank of New York, which looked at homeownership among those with and without student loan debt but did not take into account college completion. Their findings? That during the recession “homeownership took a sharp nosedive among 30-year-olds holding student debt.”  

Dynarski cites new research conducted by analysts with the Federal Reserve System Board of Governors, who tapped into data on college attendance from the National Student Clearinghouse (NSC). “The results are striking,” writes Dynarski. The new data show that the massive gap in homeownership is between those who did and did not go to college.

“Those who borrow for college do have a slower start to homeownership than those who went to college debt free,” explains Dynarski. “But by the time people are in their thirties…the home ownership rates of the two college educated groups [those with and without student loans] are statistically indistinguishable.”

“The burden of student debt,” writes Dynarski, “is dwarfed by the differences in earnings between those with and without a college education.”

Dynarski's piece is cited in a number of news articles, including “As America grieves demise of Millennial home ownership, report shows student debt may not be to blame” in Forbes; “Study: Student debt doesn’t limit home ownership” in Inside Higher Ed; "Student debt is actually not holding back the housing market, says economist" in the Washington Post; "Research debunks notion that debt-laden grads won't be buying homes" in the Chicago Tribune; and "Student Debt and Millenial Homeowners--Maybe They Can Live Together After All" in the Huffington Post

Susan Dynarski is a professor of public policy, education, and economics at the University of Michigan. She is co-director of the Ford School’s Education Policy Initiative, which engages in applied, policy-relevant research designed to improve educational achievement and outcomes.