Recent data from two different mortgage and real estate sources present widely divergent angles on a subject that affects many Americans: college loan debt and financing. And there is tremendous opportunity for mortgage loan officers (MLOs) and Realtors to establish and build long-term relationships using the findings from each.
The National Association of Realtors (NAR) released its 2017 Student Loan Debt and Housing Report, which was laden with concerns from graduates burdened with debt. Around this same time, web-based real estate database and brokerage, Redfin published an article about saving money by buying a condo instead of paying for a dorm. It's a bit ironic to see real estate offered as a college savings and finance vehicle when so many graduates say the cost of their education is a major reason they continue renting.
While the NAR report offers an opportunity for lending and real estate professionals to open dialogue, counsel and eventually help graduates, who are most likely Millennials, to buy homes, the Redfin article is most valuable to parents with children who will be heading to college at some point in the future, and outlines an interesting investment possibility.
Acknowledging the pain points and offering solid solutions to these two niche channels will add dimension to your marketing, differentiate you and establish you as an authority.
With U.S. student loan debt at $1.45 trillion dollars, NAR's survey reinforces the public perception that student loan debt is debilitating in several ways. The following are answers from Millennial respondents who do not currently own a home, showing the negative impact of education-related debt on their choices and options:
- 83% said their efforts to buy a home have been hindered
- 61% said they are not consistently able to contribute to a retirement plan
- 55% have postponed having children
- 41% have postponed marriage
Education-based marketing is helpful to this group who feel as though student loan debt is slowing them down and forcing them to delay life milestones like marriage, family and homeownership.
Guidance from a professional MLO willing to assist graduates in preparing for homeownership over time can help this dejected group move forward and get on a solid path to homeownership - along with marketing outreach featuring encouraging statistics. Use the following statistics from credit reporting agency TransUnion:
- Consumers aged 18-29 with a student loan in repayment are gaining access to new loans as good as - or better than - their counterparts without student loans.
- Student loan consumers in their 20s have surpassed their non-borrowing counterparts in obtaining mortgages, auto loans and credit cards.
- Consumers with student debt are usually able to catch up to the rest of the public in their ability to access credit within three to six years of finishing school, and that has not changed even though student loan debt has increased.
MLOs and Realtors should seize the opportunity to inform the 44 million Americans carrying student debt about how to get in position for homeownership – and become valuable advisors far beyond a first home purchase.
The cost of college could fuel new interest in investment property. Redfin published a blog, "15 Colleges Where It's Cheaper to Buy a Condo Than Pay for a Dorm" and posted cost savings ranging from $23 to $342 dollars per month. Students who need to borrow to attend college aren't usually in a position to buy a condo, but family members planning to help fund a child's post-secondary education could be. Even parents who find this idea peculiar because they have no idea where their kids will end up for college could still use investment property to help with college funding, using the traditional approach of generating income and accruing equity.
The idea of owning the home a student lives in during college becomes more attractive when you consider the cost of room and board:
- The average college charges $7.50 per meal and $4,300 per annual meal plan, according to the S. Department of Education.
- The average cost of food for Americans living on their own is a little less than $4 a meal, dining out included, according to the U.S. Bureau of Labor Statistics.
- The price of a typical college dining hall contract has jumped 47% in the last decade while overall food costs across the nation rose only 26% during the same period, according to the U.S. Department of Education.
The idea of buying condos for college kids may seem far-out to a lot of families, but the cost of higher education is a real issue that shows no signs of diminishing. Opening discussions and presenting ideas to help consumers reach goals and tackle challenges that involve your professional specialty is a great way to get and stay engaged with new prospects and past clients.
With fall being a peak time for college applications, the hefty price tag of a four-year degree is on the minds of many. Consider reaching out to people who currently have student debt and families who have college costs on the horizon with data that shows what's possible. Showing them potential paths to homeownership and investment property performance scenarios are great conversation starters.
College and homes are two of the biggest purchases consumers will ever make; MLOs and their Realtor partners can offer their expertise and insight to assist with preparing for both.