Working Paper

Student Loans and Homeownership


Abstract: We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative dataset for a nationally representative cohort. We instrument for the amount of individual student debt using changes to the in-state tuition rate at public 4-year colleges in the student's home state. A $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public 4-year college-goers during their mid 20s, equivalent to an average delay of 2.5 months in attaining homeownership. Validity tests suggest that the results are not confounded by local economic conditions or changes in educational outcomes.

Keywords: Credit Constraints; Homeownership; Student loans;

JEL Classification: D14; I22; R21;

https://doi.org/10.17016/FEDS.2016.010r1

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File(s): File format is application/pdf https://www.federalreserve.gov/econres/feds/files/2016010r1pap.pdf
Description: Revision

File(s): File format is application/pdf https://www.federalreserve.gov/econresdata/feds/2016/files/2016010pap.pdf
Description: Original

Authors

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2017-07-28

Number: 2016-10