Mounting student debt burdens is not keeping young people from buying houses, according to a new study that could allay some of the biggest economic concerns about the $1.3 trillion in student loans taken out by students.
In a paper published Tuesday by the Brookings Institution, economist Susan Dynarski concludes that the “striking gap in homeownership is not between college-educated people who did and did not borrow, but between those with and without a college education.”
Her findings run counter to the warnings from some economists, such as Harvard professor and former Obama adviser Larry Summers, that large student loan balances could be preventing some young people from buying houses and making other large investments, slowing economic growth. Those fears have been cited by members of Congress, especially Democrats, in pushing for policies to reduce student debt, such as lowering interest rates on federal student loans or allowing borrowers to refinance their loans.
Using data on student loans from the Federal Reserve Board of Governors and data on college attendance from the National Student Clearinghouse, Dynarski was able to get a clearer picture of how student debt is affecting homeonwnership than previous studies, which relied on information from credit reports.
“What divides the haves and have-nots is not student debt,” she wrote. “It’s having a college education.”
The underlying trend, Dynarski notes, is the widening disparity in the economic fortunes of college graduates and people with only a high school degree or less.
