According to a 2021 National Association of Realtors survey, six in 10 millennials who don’t own a home say it’s because of a student loan.
Tuition fees have skyrocketed over the past two decades. According to the Education Data Initiative, average tuition fees between 2010-11 and 2020-21 increased by almost 31% at public universities and more than 41% at private universities. Students now pay an average of $35,551 per year.
This debt has deepened the racial homeownership gap, which has widened over decades of discriminatory lending practices, racist housing policies and barriers to wealth for black Americans and other people. of color. These trends have caused more students from marginalized communities to take on additional financial risk for a college degree.
For many, loans make college possible. More than 45 million people in 2020 had student loan debt, averaging $37,693 per person, per Education Data Initiative. These costs have made it difficult for many to pay a down payment on a home. The homeownership rate drops nearly 2 percentage points for every additional $1,000 of student debt held by a borrower, according to the Federal Reserve.
Stacker looked at data from the Federal Reserve and the Department of Education to see how federal student loan cancellation could boost homeownership rates in the United States, especially among black Americans.
Because black Americans have historically been unable to create wealth as easily as their non-black counterparts, they rely more on loans to obtain big-ticket items like higher education and home ownership. Student loan repayments and higher interest rates hamper their ability to buy a home and can trap them in a cycle of inequality. In August 2022, the Biden administration announced it would forgive $10,000 in student loan debt, affecting approximately 43 million borrowers.
Read on to see the effect of student loan forgiveness on black homeownership rates in the United States
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