Student Loan Debt Crisis Linked to Lower Home Values

by 21 Jun 2012

(NAHB) -- June 21, 2012 - New analysis of government data by the National Association of Home Builders (NAHB) reveals a connection between rising student loan debt and the onset of the housing slump, and offers yet another example of how lower home values have hurt millions of middle class households and threatens the fragile economic recovery.

“The rising student loan debt problem is another consequence of the housing downturn,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “As more and more parents face tighter budget restraints as a result of lower home values, this is forcing an increasing number of students to take out loans for tuition, essentially shifting some of the burden of paying for college from parents to students.”

The link between rising student loan debt and the start of the housing crisis comes on the heels of a recent report from the Federal Reserve showing that U.S. household wealth plunged nearly 40 percent from 2007 to 2010 as a result of declining home values.
“Together, these findings should serve as an urgent wake-up call for policymakers to do their part to ensure a full-fledged housing recovery moves forward to restore the balance sheets of tens of millions of home owning families, create jobs and spur economic growth,” said Rutenberg.

To get housing back on track and provide the foundation for a long-lasting economic recovery, Rutenberg called on leaders in Washington to provide access to mortgage credit for qualified borrowers; demonstrate their support for the mortgage interest deduction; support affordable downpayments for home buyers; enact reforms in appraisal practices and oversight to ensure that appraisals accurately reflect true market values; and establish a strong housing finance system that retains a federal backstop to ensure that standard 30-year fixed-rate loans and adjustable rate mortgages remain readily available for working class households.

“Young Americans need to have the ability to pay for college in order to prepare for the jobs of the future,” said Rutenberg. “Homeownership has historically generated a thriving middle class by creating wealth and helping families to cover higher education costs. Hard-working American families and the economy will continue to struggle until we get housing back on track.”

View NAHB’s analysis on the connection between student loans and housing.


  • by Ethan | 6/21/2012 11:02:41 PM

    This is a great prospective. We have never thought of the correlation between the housing market collapse and the student mortgage crisis, but it makes a lot of sense. In our quest to transform debt into wealth, we have noticed a huge increase in clients that are still carrying student mortgage debt. This is a very serious issue that needs more focus.

    Thank you for doing your part in reporting this information.

  • by Linda | 6/22/2012 2:19:09 PM

    And on the list of Who Doesn't Give a Shit we find:
    1. Politicians, who find it easiest to steal from the middle class than anyone else.
    2. Banks, who profit no matter who loses or wins.
    3. The poor, who are locked out of both education AND housing
    4. The rich, who don't give a rats ass about anyone but themselves.
    5. The media, who are bought and paid for by the banks, politicians, and rich.

  • by Archer | 7/25/2012 6:42:13 PM

    I read a article under the same title some time ago, but this articles quality is much, much better.


Should CFPB have more supervision over credit agencies?