Student debt has risen to $1.5 trillion, surpassing loans for cars and credit cards.
That has led to fewer young Americans buying homes, according to a new Federal Reserve report.
Loans have reduced individuals' ability to afford a down payment and to secure mortgages.
Mounting student debt has weighed on homeownership among young Americans, Federal Reserve economists said in a new report.
Homeownership among those ages 24 to 32 fell to 36% from 45% between 2005 and 2014, according to the report. While student loans were not the main factors influencing the housing market, the Fed said that about a fifth of the decline was directly linked to student loans. Pew Research defines a millennial as someone born between 1981 and 1996, meaning they are currently between the ages of 23 and 38.
About 400,000 borrowers would have owned a home if it weren't for climbing debt, researchers Alvaro Mezza, Daniel Ringo, and Kamila Sommer estimated, as high levels of student loans reduced individuals' ability to qualify for mortgages and to save for a down payment.
"We found that a $1,000 increase in student loan debt causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during their late 20s and early 30s," the researchers said.
RELATED: Take a look at the top celebs homes to hit the market in 2018:
Top celeb homes to hit the market in 2018
Top celeb homes to hit the market in 2018
Tiger Woods' ex-wife Elin Nordegren, who was married to the pro golfer for six years, has placed her 11-bedroom Florida mansion on the market for $49.5 million.
An unassuming, Spanish-style residence in the ever-more expensive, boho-chic hills above L.A’s Silver Lake Reservoir, owned via trust by Tinseltown A-lister Leonardo DiCaprio and long occupied by a family member, hit the market at $1.749 million in October.
The star was asking $3.795 million earlier this year for her longtime mansion in the historic Hollywood Dell neighborhood that winds through the foothills between Hollywood and the Hollywood Reservoir.
Just over six months after her Los Angeles residence was busted into by an intruder/stalker, the superstar singer unsurprisingly hoisted the property near the base of Nichols Canyon up for sale at $7.495 million earlier this month.
One of the highest-paid actors on television, with a $20 million annual contract for her long-running role on “Grey’s Anatomy,” sold a 1920s Spanish villa positioned high on an elevated double lot in the historic Whitley Heights neighborhood in the foothills above Hollywood for a tad less than $2.8 million in July.
The politically engaged actor, best known as Kumar in the hilariously low-brow “Harold & Kumar” comedy film franchise, put a mid-century contemporary on a slim cul-de-sac in a particularly celeb-packed pocket of the Hollywood Hills up for sale at a touch under $1.5 million in late August.
(Photo by Noam Galai/Getty Images for Global Citizen)
The 26-year-old singer put her L.A. mansion that she was rushed to the hospital from after overdosing on the market in Sept. The HollywoHillslls abode, which she purchased for $8.3 million in September 2016, is up for sale for $9.495 million.
The low-profile but card-carrying member of the rock ’n’ roll aristocracy sold a vintage Spanish bungalow nestled into a quiet cul-de-sac in the foothills above Hollywood for a bit more than $2.3 million in October.
Blake Masters, the creator of the crime drama "Brotherhood," listed a four-story, mullet-style residence in the hills between L.A.’s Beachwood and Bronson canyons for just under $2.2 million in January.
Having recently completed a carefully considered, comprehensive and no doubt exceedingly costly restoration, update and addition of a swimming pool and guesthouse, the comedian listed an architecturally significant hillside home in the Silver Lake area of Los Angeles with a dead serious asking price of $5.125 million in October.
The actress and talk show host cut her West Coast real estate ties in early 2018, listing her longtime residence in the posh, sea breeze licked Pacific Palisades area of Los Angeles with an asking price of $8.795 million.
Fast on the heels of reports that the actress, one of the stars of the cult favorite 1990s series “Beverly Hills, 90210,” and third husband, Dave Abrams, are headed for divorce court, she’s unsurprisingly listed her custom-renovated residence in L.A.’s less-renowned but still keenly sought-after 91604 zip code in July with an asking price pushing up on $4.5 million.
Outstanding student-loan balances have more than doubled to $1.5 trillion over the past decade, outpacing levels of those for vehicles and credit cards.
A recent POLITICO/Harvard T.H. Chan School of Public Health poll found that the majority of Americans, both Republicans and Democrats, saw lessening student debt as an "extremely important" goal for Congress. Among a list of priorities, 79% listed cutting student debt as the most important.
"While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits," the researchers said. "As policymakers evaluate ways to aid student borrowers, they may wish to consider policies that reduce the cost of tuition."
The researchers suggested increasing state government investment in public institutions and easing the burden of student loan payments, such as through use of income-driven repayment.
"The study provides a nice run-down of policy implications," said Josh Wright, an economist at iCIMS. "To support homeownership, our government could look into: debt forgiveness programs, slowing the growth of tuition, and mortgage delinquency prevention programs."