CFPB director: Student loans are killing the drive to buy homes
College-educated first-time homebuyers at 10-year low
The director of the Consumer Financial Protection Bureau rolled into Boulder, Colo. with a important message backed by plenty of data.
Citing statistics from a Pew survey, the National Association of Realtors and even the CFPB itself, Richard Cordray said crushing student loan debt is significantly denting the drive to buy homes in young Americans.
"According to an analysis by the Federal Reserve Bank of New York, for the first time in at least a decade," he told attendees at the Boulder Summer Conference on Consumer Financial Decision Making, "households with student loan debt are less likely to have a mortgage than those without student loan debt."
(Check out some charts showing the ascent.)
Cordray added that according to a NAR survey, 49% of Americans cited student loan debt as a “huge obstacle” to homeownership.
"We are seeing more student-loan borrowers shying away from making this investment," he said.
And the CFPB intends to do something about it.
A major problem is the behavior of student-loan servicers.
Consumers are complaining the student loan-servicers are not being held accountable for devious activity, such as making it difficult to prepay portions of the loan and charging excessive fees to borrowers for servicing processing errors.
The CFPB will send examination teams to find, report and fine servicers engaged in these practices, Cordray said.
"We also are working closely with other regulators to incentivize student loan servicers to provide more modification and refinancing options for private student loans," he said. "This has been a difficult issue, but it is clear that more needs to be done by the student loan servicers, and Congress is now taking an interest in this issue as well."