Mounting student loan debt has long been a topic of discussion for many worried about access to the housing market by younger generations. But Julian Castro, secretary of the Department of Housing and Urban Development (HUD), recently talked about what HUD is doing to address this financial barrier and open up more home-buying opportunities for younger buyers.
Secretary Castro ran down a list of steps his department is taking to help first-time buyers and other younger professionals access the housing market despite rising student debt loads. In a May 10 speech to the National Association of Realtors[R] (NAR) Regulatory Issues Forum, Castro first painted a broad picture of the problem.
"Today about 40 million Americans carry some student debt. And 70 percent of students graduate with debt," the HUD secretary said.
Adding that his own college career was funded by student loans, grants and work-study programs, Castro noted, "But what we're seeing today is different. The Institute for College Access and Success recently reported that from 2004 to 2014, students' average debt at graduation jumped 56 percent."
Castro also punched a hole in the common perception that it is mostly the millennial generation that is suffering under this financial burden. He said, "While a majority of millennials say student debt is the No. 1 reason why they're putting off buying a home, it's the generation before them and their parents who're shouldering a heavier load of school-related debt."
While noting that student loan default rates and delinquencies have fallen in recent times, Castro said his department is taking several concrete steps to help first-time and younger buyers to enter the housing market.
Castro emphasized that the recent policy move that helped a large number of new buyers get into their first homes was the move last year to cut the mortgage insurance premium for Federal Housing Administration (FHA) loans. "To date, 1.3 million families have taken advantage of our decision to cut FHA mortgage insurance premiums. In 2015 alone, the FHA endorsed more than 753,000 home loans--up 27 percent from the year before," Castro said.
He added, "And a majority of these loans...