Bridging the Financial Gap Among Young People

The Correlation Between Cumulative Debt and Homeownership

Abstract

Experts have determined that the cost of attending college is rising (Williams, 2006) and as a result, it has altered college graduates’ cumulative debt levels. In addition, research shows that those who attend college are more likely to earn higher salaries (Ma et al., 2016). Consequently, the existence of a low-income college graduate population would be considered a paradox. Simultaneous to such changes mentioned, homeownership among young individuals is declining in the United States (Dettling & Hsu, 2014). As of today, research has focused on the relationship between student loan debt and homeownership but has neglected the relationship between cumulative debt and homeownership. This study will answer the following question: What is the relationship between cumulative debt acquired by low-income college graduates between the ages of 23-40 in the United States in the 21st century and the corresponding likelihood of homeownership? Through interviews with five low-income college graduates, I collected narratives describing their outlooks on cumulative debt and its influences on homeownership. Through thematic analysis, I drew connections between common themes that indicated how cumulative debt affected one’s actions or thoughts regarding purchasing a home.  The results showed that cumulative debt has negative effects on homeownership. Subjects disclosed that their struggle to pay their cumulative debt and inability to accumulate wealth were the two most common hindrances of purchasing a home. This is significant because cumulative debt predetermines how the subject manages their finances to pursue purchasing a home and such data may influence the financial decisions of future generations.