Student Loan Relief and Home Purchase

Abstract

Amid the COVID-19 pandemic, the U.S. Department of Education implemented administrative forbearance for student loan payments from March 13, 2020 to September 1, 2023. This unexpected policy, affecting all eligible loans and preventing anticipatory plans or selective participation, ensures a sample free from selection bias or endogeneity. This study investigates the impact of student loan relief on home purchases using the 2022 Survey of Consumer Finances. We find that among the households with a student loan, those benefiting from relief were 71% more likely to purchase homes. Our findings suggest that student loan payments hinder homeownership and subsequent wealth accumulation.

Keywords: student loan, loan relief, home purchase, Survey of Consumer Finances