February 2016 (Revised July 2017)

Student Loans and Homeownership

Alvaro A. Mezza, Daniel R. Ringo, Shane M. Sherlund, and Kamila Sommer


This paper estimates the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative data set for a nationally representative cohort aged 23 to 31 in 2004 and followed over time, from 1997 to 2010. Our unique data combine anonymized individual credit bureau data with college enrollment histories and school characteristics associated with each enrollment spell, as well as several other data sources. To identify the causal effect of student loans on homeownership, we instrument for the amount of the individual's student loan debt using changes to the in-state tuition rate at public 4-year colleges in the student's home state. We find that a 10 percent increase in student loan debt causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during the first five years after exiting school. Validity tests suggest that the results are not confounded by local economic conditions or non-random selection int o the estimation sample.

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Original: Full Paper (PDF) | Accessible materials (.zip)

Keywords: Credit Constraints, Homeowernship, Student loans

DOI: http://dx.doi.org/10.17016/FEDS.2016.010r1

PDF: Full Paper

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Last Update: June 19, 2020