Zillow describes the limits of student debt

New research from Zillow upends a commonly held assumption regarding student loan debt and its effect on falling homeownership rates.

The findings suggest that having a lot of debt doesn't greatly reduce a young person's odds of owning a home, provided he or she actually graduates. Additionally, these odds improve when graduates earn at least a four-year degree.

"College students paying their tuition with borrowed money can rest easy this fall in their dorm rooms: the income advantage of getting a degree pays off in terms of being able to buy a home in the long run," said Zillow chief economist Dr. Svenja Gudell. "Student debt isn't the evil-doer it's made out to be, at least not when it comes to homeownership. As long as students stay in school and get a degree, student debt doesn't deter them from homeownership, although it is possible that student debt could delay homeownership. People in their 20s and 30s are renting longer because they're delaying marriage, paying a lot in rent, and struggling to qualify for a mortgage when they finally find an affordable home. Add to that list that they are paying off student debt."

According to the data, a married couple with no student debt has a 69.8% chance of owning a home if one of them has a bachelor's degree. If that couple has $30,000 in debt, those chances are 67.7%.

In fact, those with student debt and no degree are the least likely to own a home (the odds for a couple with more than $30,000 in debt but no degree is less than 40%).

Graduates with advanced degrees are most likely to own a home (a couple owing $50,000 with at least one master's degree has a 75% chance, compared to a couple with $10,000 in loans and a bachelor's degree that has a 69%).