Photo: David McNew/Getty

We all know that millennials are killing the housing market, diamonds, and pretty much everything else good and holy. But did you know that millennials inability to buy homes is linked to their crushing student debt?! Of course you did, you’re not a fucking idiot.

The Federal Reserve, on the other hand, is apparently just catching on to this reality. A new paper published by the Fed today connects rising student debt to dropping home ownership among young Americans between 2005 and 2014.

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The collective amount of American student debt is now at an astonishing $1.5 trillion, surpassing credit card debt and car loans. Unsurprisingly, this financial burden makes it harder to buy a home, which, in turn, is hurting the housing market.

From the Wall Street Journal:

Homeownership among people ages 24 to 32 fell 9 percentage points, to 36% from 45%, between 2005 and 2014, the Fed said. While many factors affected the homeowner rate, the Fed said 2 percentage points, or about a fifth, of the decline was tied directly to student debt. That translated into 400,000 borrowers who could have owned a home by 2014 but didn’t because of student loans.

The reason for this is twofold: first, obviously, making student loan payments puts a strain on your finances, making it harder to save money and put a down payment on a house. Secondly, those who fall behind on their student loans have worse credit, and therefore find it harder to qualify for mortgages.

The Wall Street Journal interviewed one such unlucky soul, Tyler McKinney, 25, who graduated from the University of Alaska Anchorage in 2017, with $33,000 in student loans.

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From the Journal:

The degree led to a solid job in information technology and a salary of $68,300. He wants to buy a home, but not until paying off his loans, so he rents an apartment in Anchorage for $875 and month while devoting more than $500 a month toward his student debt. His balance is now $22,000.

Mr. McKinney says he could afford to buy but is waiting instead. “If I’m going to buy a house before my student debt was paid off, I’d just be paying off student debt until I’m in my 50s,” he says. “I want to get that monkey off my back until I make any new investments.”

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Damn, Tyler is doing better financially than most people we know, and even he can’t afford a home!

The Fed research says that the burden of student loans overwhelms the benefits of going to college.

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“While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits,” the Fed researchers wrote.

Shocking!!!

A second Fed report released today noted that many young people with student debt are leaving the rural areas where they grew up to move to urban areas. This is pretty sensible: if you’re struggling under massive amounts of debt, you’re going to need the kind of high paying job available in cities if you hope to ever pay it off. This helps explains one reason why rural areas are faring worse today than urban ones.

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And yet, despite all of this, researchers say it’s still pretty much impossible to buy a home without getting a college degree.

“Basically the only way to get your foot in the housing door is to have a degree, even if it comes with debt,” Ralph McLaughlin, deputy chief economist at CoreLogicInc, told the Journal.

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If only it was possible to go to college without getting into heaps of student debt! Like, for example, if college was free. Dare to dream.