Student Loans and Homeownership

Alvaro Mezza, Daniel Ringo, Shane Sherlund and Kamila Sommer

Journal of Labor Economics, 2020, vol. 38, issue 1, 215 - 260

Abstract: We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative data set for a nationally representative cohort. We instrument for the amount of individual student debt using changes to the in-state tuition rate at public 4-year colleges in the student’s home state. A $1,000 increase in student loan debt lowers the homeownership rate by about 1.8 percentage points for public 4-year college-goers during their mid-20s, equivalent to an average delay of about 4 months in attaining homeownership. Validity tests suggest the results are not confounded by local economic conditions or changes in educational outcomes.

Date: 2020
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