Student loans can be an issue for those seeking a mortgage -- but are they blown out of proportion?
By David Lykken
Special to MPA
The answer to the above question seems obvious. Any LO who has tried to get a recent college graduate approved for a loan in recent years has faced this challenge. Student debt is higher than it has ever been, and there doesn't seem to be an end in sight. Will student loans be the death of the mortgage industry with this new generation?
A few weeks ago, I had the opportunity to interview forecasting expert Logan Mohtashami on the subject, and he shared with me some surprising statistics. 70% of people who take out student loans owe less than $14,000, and only 3% owe over $100,000. So while student loans are an issue, they are often blown out of proportion and there isn't as much cause for alarm as we might expect.
The real issue isn't student loans; it's household formation. Whether you chalk it up to economic challenges or cultural changes, the simple fact is that people are taking longer to settle down.
It's not that millennials will never become homeowners -- they just aren't in as much of a hurry as their parents. By the time most people get around to buying homes these days, then, the student loans will most likely be manageable for them. Student loans can be a temporary setback, but in the long run, I don't think we need to worry about them quite as much as we do.
