Student Loans and Homeownership

57 Pages Posted: 15 Feb 2016 Last revised: 30 Jul 2017

See all articles by Alvaro Mezza

Alvaro Mezza

Board of Governors of the Federal Reserve System

Daniel Ringo

Board of Governors of the Federal Reserve System

Shane Sherlund

Board of Governors of the Federal Reserve System

Kamila Sommer

Board of Governors of the Federal Reserve System

Date Written: February, 2016

Abstract

We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative dataset 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 1.5 percentage points for public 4-year college-goers during their mid 20s, equivalent to an average delay of 2.5 months in attaining homeownership. Validity tests suggest that the results are not confounded by local economic conditions or changes in educational outcomes.

JEL Classification: D14, I22, R21

Suggested Citation

Mezza, Alvaro and Ringo, Daniel and Sherlund, Shane and Sommer, Kamila, Student Loans and Homeownership (February, 2016). FEDS Working Paper No. 2016-10, Available at SSRN: https://ssrn.com/abstract=2732030 or http://dx.doi.org/10.17016/FEDS.2016.010r1

Alvaro Mezza (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Daniel Ringo

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Shane Sherlund

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Kamila Sommer

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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