In a Bloomberg.com recent article, “Student Loans Near $1 Trillion Hurt Young U.S. Buyers”, is a story of a pharmacist, Roshell Schenck who is currently making $125, 000 a year, yet could not afford to buy a house because of the enormous student debt she has. Her house buying dream has to put off until she pays off her $110,000 student debt.
According to a Federal Reserve study sent to Congress on Jan 4, 2012, it reveals that outstanding student debt is getting close to $1 trillion. It explains why after the recession the low interest rates aren’t helping the housing market, especially with the tightening of loan standards constraint many young and first time home buyers.
According the Census data, there is almost 6 million Americans in the age group of 25-34 were living with their parents in 2011. It went up from 4.7 million when the recession began in 2007. With a record-low interest rate of 3.87 percent which is the lowest data in 40 years, according to Freddie Mac index, seems has not shown too much boost in the housing market. A student loan website, FinAid.org reported that “outstanding student debt surpassed credit-card debt for the first time last year”.
The average debt load of a graduate is more than $25,000. As well as, the soaring unemployment rate, 9 percent for age of 25 to 34, all these factors limit these young adults buying a home themselves.
A law degree graduate, Marie Casteel from University of Cincinnati told the reporter, Robert Willis that buying a home is not on her priority right now because she has $120,000 student debt.She is supposed to have paid about $45,000 a year once she graduated. She had to defer most of her debt payments as she started her career as a family attorney. Her full repayment schedule will kick in early next year then she plans to pay $1,500 a month.
As for Schenck, the pharmacy PhD who works as Pharmacy manager, still wants to buy a home in near future. She’s trying to save some more money for a bigger down payment also increasing the chance of getting a mortgage.
“I haven’t given up hope of one day owning my own home, says Schenck, “the dream feels like it’s farther out of reach than I ever thought it would be.”