Homeownership among millennial Americans has taken a drastic dip in recent years, and soaring student loan debt is a contributing factor in that decline, according to a new report from the Federal Reserve Bank of New York.
Young people face rising costs for education, according to the report, and they are taking on student loans at an accelerating pace.
Between 2001 and 2009, average college tuition and fees per school year rose by $3,843, the report said. The nominal aggregate student debt rose to $1.2 trillion in 2016 from $360 billion in 2004. The number of people under 25 taking on student loans during the same period increased to 45 percent, up from 25 percent.
Meanwhile, the percentage of people under 30 who owned a home fell to 21 percent in 2016, down from 31 percent in 2004, according to the report. Unsurprisingly, the rate of 23 and 25-year-olds living with their parents during that time increased to 44.9 percent from 33.5 percent.
Homeownership among people aged 28 to 30 dropped by 7.7 percentage points between 2007 and 2015, and tuition and student debt are responsible for between 11 percent and 35 percent of the decline, according to the report.
While about 59 percent of young Americans forgo college, according National Center for Education Statistics data, those that do seek post-secondary education are willing to take on larger debt burdens.
The study found that when confronted with soaring tuition costs, millennials disproportionately chose to take on bigger piles of debt rather than forego education altogether.
The fact that millennials will pursue education even at great financial costs might lead some lawmakers to believe that cuts to higher education funding would be a costless proposition, but shifting the financial burden even further onto students could backfire, the study cautioned. States that continually hike tuition “can expect both weaker starter housing markets and more ‘boomeranging’ adult children to follow.”