Onerous Student Loans Top Down Payment Costs

October 16, 2019

Students are borrowing more money nowadays, not only causing them to face higher bills but also forcing them to delay homeownership, the study notes.

The average student loan borrower owes $34,500, which is $8,500 more than the typical down payment of $26,000. More than a quarter of millennials say that student loans are the primary barrier to saving up for a down payment, according to a separate report from the National Association of REALTORS®.

“Student debt has ballooned to an all-time high as the price of education continues to outpace wage growth, and this is holding back many potential buyers from being able to purchase a home,” says George Ratiu, realtor.com®’s senior economist. “Student debt is already impacting borrowers’ ability to buy a home, and education debt is expected to hamper consumers’ financial decisions for many years down the road.”

The average tuition at a public university has increased by four times the rate of the average wage since 1986; private university tuition has increased by seven times the rate of average wages, the study shows.

The median sale price of a home in the U.S. is $260,000. The typical down payment is 10%, equaling $26,000 of the median price—$8,500 less than the average student debt of $34,500, the study shows.

Millennials make up the largest percentage of student borrowers at 34%. The generation’s total debt has bloomed to $498 billion, which is more than half the value of all U.S. homes for sale.

The average millennial has a loan balance of $33,000—$7,000 more than the typical down payment on the median U.S. home. The median down payment millennials make on homes is about $11,400.

"The important implication of rising debt is that young generations are delaying major life decisions," Ratiu says. “On the real estate front, the affordability crisis in major cities is driving young families to more affordable Midwestern and Southern markets, where savings for a down payment stretch much further and can turn owning a home from a future dream into today's reality.”

National Breakdown - Down Payment vs Debt

Total
Outstanding
Balance

Total
Number of
Borrowers

Avg Debt Per
Borrower

Median Home
Sale Price
(July 2019)

10% Down
Payment

Down
Payment
vs Debt

1.48 trillion

42.8 million

$34,500

$260,000

$26,000

75.4%

State Breakdown - Down Payment vs Debt

Location

Balance
(in billions)

Borrowers
(in
thousands)

Avg Debt
Per
Borrower

Median Home
Sale Price
(July 2019)

10% Down
Payment

Down
Payment
vs Debt

Ohio

$50.50

1,618

$31,217

$164,900

$16,500

52.9%

Alabama

$18.20

548

$33,218

$182,000

$17,818

53.6%

Arkansas

$9.80

331

$29,607

$181,000

$16,700

56.4%

Michigan

$42.10

1,290

$32,636

$170,000

$18,500

56.7%

Oklahoma

$11.70

405

$28,889

$169,500

$16,500

57.1%

Iowa

$11.20

408

$27,458

$174,000

$15,750

57.4%

Missouri

$23.50

733

$32,064

$163,000

$18,738

58.4%

West

Virginia

$5.90

204

$28,922

$195,154

$17,180

59.4%

Kentucky

$15.50

527

$29,423

$231,000

$17,650

60.0%

Georgia

$52.90

1,422

$37,206

$205,000

$22,980

61.8%

Indiana

$23.90

815

$29,311

$185,972

$18,347

62.6%

Tennessee

$24.40

740

$32,973

$187,500

$21,000

63.7%

Pennsylvania

$52.30

1,610

$32,491

$215,000

$21,000

64.6%

South

Carolina

$21.30

628

$33,933

$226,000

$22,200

65.4%

Illinois

$50.70

1,466

$34,589

$222,000

$22,700

65.6%

Nebraska

$6.40

223

$28,725

$190,000

$19,000

66.1%

Louisiana

$16.60

540

$30,729

$205,000

$20,450

66.5%

North

Carolina

$38.00

1,128

$33,679

$222,450

$23,100

68.6%

Mississippi

$12.30

382

$32,207

$235,000

$22,501

69.9%

Wisconsin

$19.00

664

$28,614

$200,000

$20,000

69.9%

New

Mexico

$6.00

198

$30,349

$218,250

$21,908

72.2%

Florida

$75.90

2,197

$34,544

$205,000

$25,000

72.4%

South

Dakota

$2.90

102

$28,431

$250,000

$20,650

72.6%

Vermont

$2.30

69

$33,333

$243,750

$24,375

73.1%

Kansas

$10.10

346

$29,174

$230,000

$22,115

75.8%

Maine

$5.00

166

$30,102

$238,000

$24,250

80.6%

Minnesota

$21.90

724

$30,253

$243,100

$24,500

81.0%

Delaware

$3.60

109

$32,907

$245,025

$26,990

82.0%

Connecticut

$13.90

435

$31,969

$319,900

$26,500

82.9%

Texas

$89.50

2,992

$29,911

$272,000

$24,807

82.9%

Arizona

$24.10

749

$32,193

$215,000

$26,800

83.2%

North

Dakota

$2.00

77

$25,940

$265,000

$21,860

84.3%

Maryland

$28.90

741

$39,028

$268,998

$33,053

84.7%

Virginia

$34.10

959

$35,565

$305,000

$31,800

89.4%

New

Hampshire

$5.30

171

$30,940

$317,250

$28,000

90.5%

Idaho

$5.90

197

$29,919

$270,000

$27,313

91.3%

Wyoming

$1.30

47

$27,484

$285,000

$25,866

94.1%

Montana

$3.30

111

$29,837

$255,000

$28,755

96.4%

Alaska

$1.90

61

$31,148

$280,125

$30,049

96.5%

Rhode

Island

$3.70

126

$29,459

$279,900

$28,500

96.7%

New

York

$76.50

2,192

$34,895

$303,125

$34,500

98.9%

Nevada

$8.80

286

$30,812

$308,360

$31,000

100.6%

Oregon

$16.50

490

$33,646

$334,375

$35,000

104.0%

New

Jersey

$34.20

1,055

$32,432

$352,200

$34,500

106.4%

Utah

$7.90

269

$29,412

$336,250

$33,000

112.2%

District

of Columbia

$5.50

105

$52,581

$385,000

$60,000

114.1%

Colorado

$22.90

686

$33,401

$625,783

$38,250

114.5%

Washington

$22.60

706

$32,016

$387,700

$38,500

120.3%

Massachusetts

$25.70

814

$31,584

$430,000

$42,200

133.6%

California

$116.00

3,429

$33,832

$515,000

$51,000

150.7%

Hawaii

$3.60

108

$33,395

$537,050

$57,500

172.2%

Source: