Student loan payments were paused in response to the COVID-19 pandemic, with the initial suspension starting in March 2020 and extended multiple times.
Texas alone carries a federal student loan balance of $127.2 billion, according to data from the U.S. Department of Education Federal Student Aid. On average, Texans owe $26,273 each in student loan debt, with an average monthly payment of $273, according to Clare Losey, assistant research economist at the Texas Real Estate Research Center at Texas A&M University.The breakdown
According to data from the U.S. Department of Education Federal Student Aid, around 3.8 million Texans account for the state's $127.2 billion in outstanding student loan debt, as of June.
Losey said data shows student loan debt impacts borrowers' finances, homeownership prospects and savings.
- Losey explained student loans make it much harder for households to save for buying a home. Her data shows student loan debt nearly doubles the time it takes for a household to save for a 5% down payment on a $217,000 home—which is the price of homes in the lower 25% bracket for 2021—from 1.5 years to 3 years.
In addition, according to 2021 survey data from the National Association of Realtors, millennials who do not own homes cite student loan debt as a major obstacle to homeownership, with 60% reporting delays of at least three years in purchasing a home due to student loan payments.What experts say
Cathy Trevino, chair of the Houston Association of Realtors, said the resumption of student loan payments, rising home prices and limited housing inventory are causing aspiring homeowners to face a “trifecta of obstacles.”
Single-family average sales prices were up 0.8% year over year, while single-family median sales prices were down 2.2% year over year, according to a HAR home sales report from September. Rising interest rates have been pushing prospective homebuyers to delay their home purchase plans, according to the report.
Tricia Turner, a Houston-based Realtor and owner of Tricia Turner Properties, recommends prospective homebuyers with student loans renegotiate student loan payment plans for lower monthly payments and consider a 40-year mortgage to lower monthly obligations.
However, Steven Craig, professor of economics and associate dean of faculty and research at the University of Houston, said he believes student loan payments resuming did not directly reduce housing demand, as borrowers were aware of their financial commitments.
