The extensive amount of national debt held by college graduates in federal student loans debt is affecting their ability to qualify for a home loan and a delay in housing market growth.
Students coming out of college today have more federal student loan debt than ever and they’re coming into an economy that is under performing. These things pile onto each other and will not help the housing recovery.
Income Used to Pay Down Debt
The $1 trillion in student loan debt is starting to slow the economy just as the housing bubble created a mortgage debt problem. The issue is that any extra consumer income is now going to pay down debt from student loan. However, federal student loans, unlike mortgage loans, can be eliminated in bankruptcy. Federal student loans are forever for most people although there are exemptions.
The exemptions from having to repay a federal student loan are few and very difficult to qualify. However if you want to find out what exemptions can alleviate federal student loans even temporarily, setup a meeting with Winter Park Florida lawyer Eric Lanigan or Roddy Lanigan.
Industry analysts say that housing prices are likely to fall for a sixth straight year. That in turn may be a consideration in consumer spending, but not for those and strapped with student loans. This will be difficult although the economy may start to show some signs of strength.
A tight budget makes it impossible to save for or buy a home and renders college graduates with debt unable to engage in consumer spending that would in turn sustain the economy. This will continue for many years for students with federal loans. Because while an average amount of debt is approximately $25,000 per student, college costs continue to grow. Students that continue into masters programs can incur debt extending beyond $100,000.
Mortgage Rates Lowest in 40 Years
Record-low mortgage rates haven’t revived housing sales enough to spur the economic recovery. A 30-year fixed rate mortgage was 3.87 percent on February 9, according to a Freddie Mac index which showed this to be the lowest rate in 40 years.
Now that there is so little value remaining in homes across the country, Americans have nowhere to borrow money for college expenses, cars, or business. Not owning the home of their dreams due to student loans, means individuals will have to pay cash.