One of the great American traditions was that young couples used to save for the downpayment on their first house.
Owning a house was a foremost feature of the American Dream.
But what if the young couple is already head over heels in debt? .
The Federal Reserve today released a report that attributes the decline in home ownership in th U.S. to student loan debt. The Wall Street Journal reports on the Fed's findings:
The share of households headed by someone between ages 24 and 32 years old who owned a home declined 9 percentage points in the decade through 2014, falling to 36% from 45%, the Fed said. There were many factors, but roughly 2 percentage points—or 20%—of the decline was directly due to households owing student debt, the Fed found.
The Fed estimates student debt prevented 400,000 households in that age group from buying a home during that period.
The report also found that people with student debt are more likely to leave rural areas than those without student loan debt. It is uncertain how, or if, these two things are linked.
Going to college was supposed to give people a leg up in life. It was an advantage.
Now, however, it looks like acquiring the cachet of college might actually hamstring many young people starting out in life.
The solution is not to find better ways to borrow but rather to bring the cost of college down.
As Glenn Harlan Reynolds observed in USA Today, one of the biggest factors contributing to the cost of college is administrative bloat.
Colleges aren't hiring more professors; they're hiring more administrators (including some, such as "diversity" administrators, who cost a lot but aren't improving the overall intellectual rigor of the university). .
The upshot is that going to college, ironically, ends up holding a lot of people back.
We've gone from the American Dream to the nightmare of serious debt.