Soaring student loan delinquencies and the aftershocks of the 2008 economic downturn have kept people in the Millennial generation from being able to buy their own home, Housing and Urban Development Secretary Julián Castro said during a speech at a recent Mortgage Bankers Association event.
"They came of age during the economic crisis, burdened with incredible student debt," Castro said. "They are living with their parents longer, and delaying getting married and having children. These factors are a big reason why the homeownership rate among folks under 35 has reached historic lows. If we help them prosper, our housing market will prosper."
The Consumer Financial Protection Bureau estimates there is $1.2 trillion in outstanding U.S. student loan debt and more than seven million people in default on their loans.
Along with the student loan debt burden for potential homebuyers, Castro said the impact of the economic crisis on minorities and credit access issues are having a negative effect on the housing market.
"Unfortunately, lending to minorities is at a 14-year low, in part because these folks were hit hardest by the economic crisis," Castro said. "So its critical that we expand opportunity to all Americans so they can strengthen their financial futures and, in turn, strengthen the housing market of the future."
Castro, however, added that it is still difficult for people to secure a home loan.
"In fact, according to the Urban Institute, the housing market is missing out on 1.2 million loans every year because credit is so tight," he said.
Castro noted several initiatives to improve access to credit and lending processes.
"But we also know there are limits to what we can do," he said. "Thats why we continue to fight for Housing Finance Reform. We must use the bipartisan momentum thats been generated to date to build a 21st century housing market that ensures opportunity for all those who work for it."
According to the Impact of Third-Party Debt Collection on National and State Economies survey by ACA International and Ernst & Young, student loan debt was 25.2% of total debt collected in 2013, second only to medical debt.