Millennials – with a combined allotment of $1.56 trillion in student loan debt, the idea of purchasing a home may seem like another battle. But with a new study from First American, it looks as though those with a college degree have a better opportunity to purchase a home than those who don’t.
While student loan debt isn’t a simple fee, it also isn’t directly stopping homebuyers from purchasing homes – it’s more so delaying it.
So how much can those with a degree afford on average?
First American looked at a renter’s house-buying power it based on a 30-year, fixed mortgage rate (4.64% in January), with a 5% down payment. Their calculation found that:
- Those without a college degree had a buying power of: $194,415
- Those with a college degree had a buying power of: $346,540
- Those with a Graduate level (MA and/or PhD): $423,096
While student loan repayment plans will change these predicted buying power assumptions, on average, a college educated homebuyer will have more than $120,000 greater in home buying power than those without.
Acquiring student debt is intimidating – but higher education leads to higher income, which looks like helps pays off your homeownership dreams in the long run.