College Grads Face High Hurdles to Buying First Homes

August 28, 2014
student loan news
Recent college graduates who are paying off student debt and want to buy a home need to earn about one-third more annually, or an average of $8,969 more, than their debt-free peers, RealtyTrac reports. The real estate web site looked at the median home price for each state and county and calculated the minimum amount of income needed to qualify for a mortgage at that price.

Both student loan debt and housing costs vary by state, so the figures differ across regions. While California boasts one of the lowest levels of student loan debt, it has some of the country's highest home prices. There, graduates with student loans need to earn just 12 percent more than graduates without loans. In Connecticut, by comparison, recent graduates with student loans need 58 percent more income to match the buying power of students without loans.

While the average starting salary for a bachelor’s degree is about $45,000, the average 2014 graduate has $33,000 in debt. This is triple the average of 20 years ago. Heads of households who are young, college-educated adults without student debt have about seven times the typical net worth of households headed by a young, college-educated adult with student debt, the Pew Research Center found. Households with student debt tend to accumulate less wealth and tend to have higher total indebtedness, including car debt and credit cards.

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