The diploma collecting dust in your closet may not have landed you the dream job you always wanted, but it turns out it may be of some use after all.
New research shows that getting a college degree can significantly increase one’s chances of homeownership shortly after graduation.
According to the report by the WSJ:
College graduates ages 18 to 34 years old without student debt will need just over five years of additional savings to afford a 20% down payment for a starter home, defined as the median home at the bottom third of the market, according to research to be released Monday by Apartment List, a rental listing website. In comparison, it takes college grads with student loans about 10 years. For those who haven’t graduated from college, the wait to buy a home swells to nearly 15.5 years.
The report is based on a survey of 31,000 respondents and looks at how much people in each category are currently saving, coupled with how much they have already saved and are likely to receive from friends and family.
People without college degrees fare worse because their incomes tend to be much lower but also because they are less likely to get help with down payments from friends and family. College graduates without student debt expect to get more than $8,000 of help and those with loans expect to get nearly $4,000. But those without a college education expect to receive just over $2,000, according to the report.
Of course, the assumption is that the hundreds of thousands of dollars dumped into your education will be rewarded with at least some type of career path. If it’s been five years since grad day and your “job” is still writing the perfect screenplay, don’t expect to trade in that laminated piece of paper for a house. It’s not a Chuck E. Cheese token.
Here’s the thing, waiting only five years after graduation to have a home of your very own isn’t bad. In fact, that’s a fairly promising statistic. The problem rests in the implications for the roughly 70% of students who took on loans or flat-out didn’t attend a university.
Getting a college degree has gone from being an optional thing that gave you a leg up on the competition, to being the gatekeeper for the “average” American life. What’s worse is that those that can’t afford it—presumably the people who need it the most—are basically told: “Tough luck.”
For your reading pleasure, I’ve included the definition of a vicious circle here.
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