While Boomers and Gen X steadily built equity, Millennials and Gen Z are starting adulthood with crushing debt loads that delay or derail buying a home.
An exclusive new study from The Kaplan Group reveals a strong negative correlation between student debt and homeownership rates, and when segmented by age group, the generational divide becomes stark.
The study used a combination of national and state-level data from the U.S. Census Bureau, Federal Reserve Economic Data, and EducationData.org to examine trends in student loan debt and homeownership rates from 2007 to 2024.
Homeownership is the cornerstone of long-term financial stability and wealth building.
- If Millennials and Gen Z can’t buy homes because of their student loans, it widens the generational wealth gap and reshapes the future of real estate, family planning, and financial independence.
Student loan debt isn’t just a personal finance issue anymore—it’s a generational one. We’re watching an entire cohort of Americans miss out on the wealth-building engine their parents relied on.
Key Findings From the Study
- 107.6% increase in average student loan debt per borrower (2007: $18,230 → 2024: $37,850)
- 4.9% drop in national homeownership rates over the same period (2007: 68.1% → 2024: 63.2%)
- -0.70 correlation between inflation-adjusted student debt and homeownership, indicating a strong inverse relationship
- $1,000 in student debt is linked to a 1.8% decrease in homeownership likelihood
- First-time buyers with student loans spend 39% less on their homes than buyers without loans
- Millennials and Gen Z carry the highest student debt levels and have the lowest homeownership rates in U.S. history
What’s Driving the Divide
While earlier generations had an easier time becoming homeowners, younger generations haven’t had it so easy.
- Boomers and Gen X:
- Earlier generations benefited from lower tuition costs, more accessible housing prices, and less debt.
- Many were able to purchase homes before age 30, using equity to build long-term wealth.
- The housing market rewarded this early entry with decades of appreciation.
- Millennials:
- Graduating into the Great Recession, Millennials faced stagnant wages, high rent, and rising loan payments.
- Student debt reduced their ability to save for down payments and pushed many out of competitive housing markets.
- As a result, Millennials’ homeownership rates remain significantly lower than those of previous generations at the same age.
- Gen Z:
- The youngest adult generation is entering the workforce in an era of persistent inflation, rising interest rates, and record-high home prices.
- Student loans remain a major hurdle, limiting credit capacity and narrowing buying options.
- Many are delaying both college and homeownership altogether, uncertain about whether either investment will pay off.
Student debt has restructured the path to homeownership. For many Millennials and Gen Z, buying a home is no longer an early milestone but a distant goal.
Between the Generations
The study’s findings reveal that student loan debt is not just a monthly budget issue—it’s a barrier that alters major life decisions.
The financial weight of student loans appears to delay the ability of younger generations to enter the housing market, limiting their options and reducing how much they can afford when they do buy.
At the same time, those with less or no student debt are better positioned to purchase homes earlier and spend more.
This creates a widening gap in homeownership opportunities within the same generation, shaped largely by the presence or absence of student loans. The result is a growing divide in who can build wealth through homeownership and who remains on the sidelines.
What’s Next
Policymakers and lenders must adapt to the long-term financial realities student loan borrowers face in today’s housing market.
- New homebuyer assistance programs should account for the unique burden of student debt and provide targeted relief.
- Mortgage lenders can refine eligibility models to recognize consistent repayment history—even with outstanding student loans.
- Builders and developers should consider more flexible financing options and smaller starter homes for debt-laden buyers.
- State and federal agencies must view student debt not just as an education issue, but as a housing access barrier.
To close the generational homeownership gap, stakeholders must move beyond traditional affordability measures. Integrating student debt considerations into housing policy, mortgage lending, and financial planning will be key to restoring access to homeownership for younger Americans.
Methodology
- This analysis used national and state-level data from the U.S. Census Bureau, Federal Reserve Economic Data, and EducationData.org to examine trends in student loan debt and homeownership rates from 2007 to 2024.
- Data were cleaned and aggregated, with student debt figures adjusted for inflation using 2007 as the base year, and then merged with homeownership data.
- Pearson correlation analysis was performed on both nominal and inflation-adjusted figures, and trends were visualized with line and scatter plots to highlight that increasing student debt is associated with declining homeownership, with state-level insights further underscoring regional disparities.
