Student debt is making it harder for people of your generation to own a home

A study based on Next Steps has found that people who took out a student loan to go to university are less likely to own a home than those who didn’t take out a loan, or who didn’t go to university.

What we asked you and your parents

When you were 25, we asked you whether you owned your home, rented, or lived with your parents. You also told us about any student loans you’d taken out.

Over the years, your parents provided a wide range of information in earlier surveys, including family background, income and whether they owned the family home.

What the researchers found

By age 25, 28% of Next Steps university graduates who hadn’t taken out a student loan owned their own home, compared to 15% of Next Steps university graduates who had taken out a student loan. Of the Next Steps members who hadn’t gone to university, 17% owned their own home. Graduates with loans were more likely to live with their parents (37%) compared with graduate non-borrowers (33%) and non-graduates (33%).

Taking into account geographical differences in the housing market and a range of other factors, the study found that graduates with no student loan debt were 16 percentage points more likely to own a home than non-graduates, and 13 percentage points more likely than graduate borrowers.

Graduate borrowers were about as likely to own their home as non-graduates, despite having higher salaries on average and being more likely to have a partner. The study authors concluded that student loan debt might be a barrier to homeownership, as it tended to reduce take-home pay, affecting people’s capacity to save up for a deposit and repay a mortgage.

Why this research matters

This study shows how student loan debt influences a person’s chances of becoming a homeowner. It’s important that policymakers think about how housing and higher education funding interact, to help ensure that people with student loan debt can afford to rent or buy their own homes. Otherwise, people from less well-off backgrounds could be discouraged from getting a university degree, if it means they might struggle to afford housing in future.

This research looks at the experiences of adults up to age 25 while the average age of first-time buyers in England is 33 years old. Your contribution in future surveys will help researchers find out more about renting and home ownership in your generation.

Find out more about this research          

Does student loan debt structure young people’s housing tenure? Evidence from England by Ariane de Gayardon, Claire Callender and Stephen L. DesJardins was published in the Journal of Social Policy.