It’s 2016 and a fresh new crop of students brimming with knowledge and ready to enter the work force are merely weeks away from graduation! Many of these students will go on to secure well-paying jobs and begin growing their savings in order to invest in their very own home just like their parents before them, right? Well, maybe not. According to a study by Newamerica.org, the average student loan debt of a 2016 college graduate is $37,172, rising from 2015’s average of $35,051.
Individuals who have degrees fit the demographic of the typical first time homebuyer, but with such staggering debt being held by 70% of the graduating class and millennials making up 40% of the unemployed, we can only expect to see a more distinct drop in the amount of first time homebuyers. The Wall Street Journal released a report in 2014 that predicted student loan debt could decrease the annual national sales around 8%. This decrease in home sales is directly correlated to the nation’s decrease in economic growth. Big purchases, such as a home, are what drive our economy and with the country’s student loan debt totaling a whopping $1.2 trillion, we will continue to see the trickling effects this has on real estate purchases.
In a time where tough job markets with low earning potential and high student loan debt dictate the decisions of young Americans, homeownership is often looked at as unattainable. However, even with the daunting predictions ahead, there may be a silver lining. While economic prospects continue to improve, recent graduates may begin to see the advantages of investing money into a home. Since fixed mortgage rates have remained at or close to historic lows, renting isn’t always the most affordable option anymore. In fact, owning a home could become a valuable asset and means to build wealth.
Yes, there is a long journey ahead in providing affordable education, but don’t let student loan debt hold you back from investing in your future. There are still many options for young American graduates and the class of 2016 has a bright future ahead.