Asset Building Financial Inclusion Working Paper

Is Student Debt Compromising Homeownership as a Wealth-Building Tool?

In this study, the authors use 2007–2009 Survey of Consumer Finance longitudinal data to examine if having student loans affected home equity during the Great Recession. We find that median 2009 home equity ($90,000) for households with no outstanding student loan debt is twice as high as that of households with outstanding student loan debt ($45,000). Further, multivariate statistics reveal that a household with a college graduate, median 2007 home equity, and student loan debt had $54,334 (40%) less home equity in 2009 than a household with a college graduate, median home equity, and no college debt. The main policy implication is that outstanding student debt may be associated with reduced home equity. This finding raises questions about the short-term financial effects of overreliance on student borrowing as a financial aid strategy, particularly given the importance of home equity accumulation as a vehicle for economic security, itself a primary goal of higher educational attainment. However, this topic is complex, and more research is needed before suggesting policy prescriptions.

Project: College Success


Elliott, W., III, Grinstein-Weiss, M., & Nam, I. (2013). Is student debt compromising homeownership as a wealth-building tool? (CSD Working Paper No. 13-33). St. Louis, MO: Washington University, Center for Social Development.