DENVER (KDVR) — Student loan forgiveness will boost homeownership rates for borrowers already more likely to own a home than their peers, according to a new study.
President Joe Biden announced Wednesday that up to $20,000 in student debt will be forgiven for federal student loan borrowers. Additionally, borrowers will not have to make monthly payments until 2023.
A highly educated state, Colorado will have a large number of beneficiaries. Colorado has 771,200 student loan borrowers. Each has borrowed a relatively high amount, with just over $37,000 in average debt per borrower.
A new study from brokerage firm Rocket Mortgage says student debt relief will boost borrowers’ ability to buy a home. It will do so, however, within a population with higher-than-average homeownership rates. The study surveyed over 2,000 adults aged 26-41 years old.
Homeownership is a nearly universal goal for the survey’s respondents. Over 96% said they want to own a home someday. To that end, they are eager for some student loan forgiveness. Survey respondents say Biden’s plan will shorten their home purchasing timelines.
A large majority of borrowers said student loan forgiveness would open new opportunities. About 80% said they anticipate buying a home in the near future following the student loan forgiveness.
For those already planning a home purchase, it would speed things up. Just under 70% of millennial borrowers planning a home purchase in the next 4-9 years said student loan forgiveness would shorten their timeframe to 1-3 years.
The survey, however, also said these buyers are already ahead of the pack when it comes to homeownership.
Census data says 48.6% of millennials own a home. According to Rocket Mortgage’s survey, though, millennials with student loans are more likely to own a home than millennials altogether. Of millennial borrowers, 56.8% owned a home.
This could reflect both the income a college education gets borrowers. Over a lifetime, college graduates make between $630,000 and $900,000 more than high school graduates without college education.
While millennials have more collective student debt than any other generation, it is still a minority of millennials who currently have student debt, according to the St. Louis Fed. About 31% of millennials have student debt balances.