By Todd Beamon
So many students are graduating from college with so much debt that they cannot buy homes, threatening the nation's housing recovery and blocking a generation of young people from attaining that first staple of the American Dream.
"This is a huge issue for us," David H. Stevens, CEO of the Mortgage Bankers Association, told The Washington Post. "Student debt trumps all other consumer debt.
"It’s going to have an extraordinary, dampening effect on young people's ability to borrow for a home, and that’s going to impact the housing market and the economy at large," Stevens said.
First-time buyers have not been able to continue the home-buying momentum of recent years despite only slightly rising prices and mortgage rates, the Post reports.
These buyers, who have accounted for nearly a third of the homes purchased in the past year, are critical to the industry, and observers fear that crushing student debt is hampering their ability to buy homes.
Student loan debt has tripled from a decade earlier, to more than $1 trillion, while wages for recent college graduates have dropped, the Post reports.
"I didn’t know anything about buying a house when I was taking out a student loan, so it’s almost like I am being blindsided by a decision I had to make years ago," Stephanie McCloskey, 26, an administrative assistant, told the Post.
She graduated from college two years ago, owing $30,000 in loans, and her $500-a-month payment disqualified her for obtaining a mortgage for a home in the Washington suburbs, the Post reports.
According to a recent study by the National Association of Realtors, of the 20 percent of first-time buyers who said it was difficult to save for a down payment, 54 percent said it was because of student loans, the Post reports.
Studies by both the Consumer Financial Protection Bureau and the Federal Reserve Bank of New York have warned about the impact student loan debt may have on home buying.
"With more and more Americans putting big chunks of their income toward student loan payments, that means they’re less able to stash away extra cash for their first down payment," Rohit Chopra, the CFPB's student loan ombudsman, told the Post.
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