Student Debt Going To Affect Young Home Buyers

The COVID-19 pandemic has created turbulence in so many lives! College students too are not left from their wrath.

According to the personal finance site ‘Make Lemonade’, even before the pandemic, nearly 2.2 million student loan borrowers had a student loan balance of at least $100,000.

Real Estate Witch’s study shows, 56% of college students lost a full- or part-time job in 2020 as a result of the pandemic. 

With many students taking up jobs in service industries such as restaurants, bars, tourism, or retail, many have lost out on this opportunity and will struggle to pay their bills for tuition, books, housing, and utilities throughout the year.

About 36% of student’s parents have lost income due to COVID-19, and it has directly impacted their ability to pay for college and living expenses. 

With many parents typically helping out with tuition and the decrease in summer jobs for students, 48% say they are concerned about paying tuition this year.

While many colleges and universities have opted for online courses to prevent the spread of the virus, this doesn’t mean they’re reducing tuition rates. 

Just 3% of the 100 colleges surveyed planned to decrease their tuition this academic year.

As a result, 48% of students are taking out more in loans this year than they did in 2019 — with 33% taking out at least $10,000 more than they did last year. 

With issues regarding their basic necessities what about their ability to buy a home in the future? 

This issue is going to affect them after graduation also as already the unemployment rate is so high more competition for a limited number of positions in the job market, and it may even be from more qualified candidates who were laid off during the pandemic. 

If you plan to buy a home with existing student debt, the easiest way to get rid of debt in the future is to reduce the number of loans taken out in the first place. 

There are several types of down payment assistance that may be available to those with student loans, depending on their circumstances. 

FHA loans require as little as 3.5% in down payment and are available to first-time homebuyers.

USDA loans have even lower down payment requirements — as low as 0% — but are usually only applicable to certain areas of the country.

If the buyer or their immediate family has military service, they may also qualify for a VA loan.

Connect with lenders who can help you in debt consolidation and pay off any balance if you have a delinquent payment.

Experts feel the young adults would most likely move in with parents to save up for a down payment or live with roommates to cut down on bills, and maybe even skip the starter home phase altogether. 

Also, they’ll be looking for smaller homes in the suburbs where home prices are more affordable.