Student Loan Debt Precludes Mortgage Debt

Because the cost of acquiring a college education has increased so much in the past decade, many millenials have crippling student loan debt. Before they can begin to save a down payment on a house and take on a home mortgage, they need to spend years paying off their student loans. The rate of homeownership among young people has plummeted.

Inability to save the down payment is only part of the problem. Lenders will only allow borrowers to spend about 36% of their gross monthly income on all debts, including student loans, car payment, credit card payments and mortgage. If student loans are eating a large portion of their young peoples' pay checks, they won't have much left to qualify for a mortgage.

The other problem is the lack of jobs. College graduates who are unable to find a job or who lost a job will be unable to make their student loan payments. When they default on their student loans, their credit is trashed, and they are in a hole that will be very difficult to climb out of. Adding to the difficulty is that some employers do a credit check as part of the hiring process. Bad credit means no job offer. 

Some people who had been promised that their student loans would be forgiven if they worked in a public service job found that rug pulled out from under them last year.