Does Post-recessionary Student Loan Debt Negatively Impact the Likelihood of Homeownership More Than Pre-recessionary Student Loan Debt? Evidence from Comparative, Cross-sectional Analyses of the Survey of Consumer Finances Data from 2004 and 2013

Abstract

More students are taking on loan debt for the purpose of postsecondary educational expenses and the amount of debt that students are taking on continues to increase over time. Until recently, few researchers had investigated the effects of student loan debt on wealth and non-financial asset accumulation, including homeownership. This paper contributes to a growing body of literature by using the 2004 and 2013 Survey of Consumer Finances cross-sectional data to explore and compare the relationship between pre- and post-recessionary outstanding student loan debt and the likelihood of homeownership using a difference-in-differences estimation model controlling for year fixed effects. This estimation strategy is also performed for population subgroups by age, race, and highest level of educational attainment. The paper provides compelling evidence that, while the individual explanatory power associated with student loan debt may be relatively small, student loan debt is statistically significantly and negatively associated with homeownership likelihood, on average, for all student loan debt holders. The data did not provide evidence to support the hypothesis that outstanding student loan debt decreases the likelihood of homeownership for all heads of household more in 2013 than it did prior to the recession, in 2004. The negative association between student loan debt and the likelihood of homeownership increases in size in relation to the amount of outstanding debt held for certain debt-holding population sub-groups, but not for others.