Discussion Paper

Diplomas to Doorsteps: Education, Student Debt, and Homeownership


Abstract: Evidence overwhelmingly shows that the average earnings premium to having a college education is high and has risen over the past several decades, in part because of a decline in real average earnings for those without a college degree. In addition to high private returns, there are substantial social returns to having a well-educated citizenry and workforce. A new development that may have important longer-term implications for education investment and for the broader economy is a significant change in the financing of higher education. State funding has declined markedly over the past two decades, a trend that has coincided with a significant increase in college tuition. To cover the rising cost of college, students and families have increased their reliance on student loans, funding a greater share of an increasing overall college cost. While the federal student loan program has undoubtedly helped mitigate the impact of higher costs on college access and enrollment, more and more students now leave college with higher amounts of debt. Given these trends, it is critical to understand whether holding student debt has affected young Americans? later life outcomes, such as homeownership.

Keywords: student loan; graduation; Homeownership; education; mortgage; degree;

JEL Classification: Q1; D1; J00;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2017-04-03

Number: 20170403