Millennials who purchased homes during the pandemic are facing a unique challenge as student loan debt repayments resume. According to Danielle DiMartino Booth, a former researcher at the Dallas Fed, millennials who left the cities and took advantage of low mortgage rates to buy homes in the suburbs will now have an extra financial burden. This group, consisting of millennials making between $100,000 and $225,000, will not be eligible for any student loan relief. With the added expenses of mortgage and car payments, property taxes, and homeowners insurance, this cohort is predicted to experience a surge in household bankruptcies.
This situation adds to the financial burdens already faced by millennials and Gen Z, including inflation, healthcare costs, and the rising costs of housing and cars. Student loan repayments will only add to the financial strain for those trying to balance their housing expenses. Additionally, younger borrowers will also be prevented from affording homes due to their student loan payments, contributing to the current lack of affordable housing in the US market.
In summary, millennials who moved to the suburbs and became homeowners during the pandemic will be hit hard by the resumption of student loan repayments. This group, typically earning higher incomes, will not have access to any relief measures. The combination of mortgage payments, car payments, and other expenses will likely lead to an increase in household bankruptcies. This adds to the financial challenges already faced by millennials and Gen Z, and makes it even harder for younger borrowers to afford homes in the current housing market.
