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Kamila Sommer, Ph.D.

Federal Reserve System, Board of Governors, USA

Authors: Alvaro Mezza, Daniel Ringo, Shane Sherlund, and Kamila Sommer

Abstract: We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative dataset for a nationally representative cohort.  We instrument for the amount of individual student debt using changes to the in-state tuition rate at public 4-year colleges in the student's home state.  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 into the estimation sample.

JEL Classification: D14, I22, R21

Full Text:  “Student Loans and Homeownership”