The President's plan to eliminate as much as $10K in student debt for many borrowers could improve the financial situation of millions of Americans seeking to enter the homebuying market, creating ripple effects for multifamily properties. The President himself referenced the potential impacts for younger generations of people who have put off buying property because of student loan debt. “All of this means people can start finally to climb out from under that mountain of debt,” the president said in remarks from the White House.
“To finally think about buying a home or starting a family or starting a business." In theory, $10K in debt forgiveness, or $20K for Pell grant recipients, could enable would-be homebuyers to proceed with plans to buy property — and indirectly impact the for-rent market as renters become owners. Student debt can impact a potential buyer’s ability to save for a down payment, the borrower’s debt-to-income ratio and their credit score, a spokesperson for the National Association of Realtors told Bisnow via email, citing the organization's own research.
"We encourage efforts to improve and streamline current lending programs and increase borrower education about the true cost of student loans," the spokesperson said. Nearly 1 in 8 Americans still has student loan debt, but the impact is generational, with nearly half of all millennials carrying some amount of student loan debt. But saving for a down payment is still a long process, and the for-sale market is a difficult place to navigate in today's economy. The average student loan is about $30K, with an average monthly payment of $393. One-quarter of student loan borrowers (about 20 million people) have less than $10K in outstanding student debt, the Fed reports, so presumably that debt would cease to be a consideration in planning to buy property.