Student Loan Debt Hinders Homeownership for Ontario Graduates
Today, the Ontario Real Estate Association (OREA) has released new polling results that shed light on the significant influence of student debt on Ontarians’ ability to achieve homeownership. Conducted by Abacus Data on behalf of OREA, The Impact of Student Loan Debt on Homeownership report reveals that a substantial number of Ontario graduates find their dreams of owning a home deferred due to student loans.
Student Debt’s Strain on Homeownership
The report indicates that Ontario graduates burdened with student debt exceeding $5,000 commonly believe that their debt hinders their ability to save for a home. This financial strain has led 42% of these graduates to contemplate relocating to provinces with a lower cost of living and more accessible housing options.
Additionally, the report highlights that many young adults are postponing key life milestones due to student debt, including moving out of their family homes, getting married, and starting families.
OREA CEO Tim Hudak emphasized the critical role student debt plays in the housing affordability crisis, stating, “Student debt is not merely a financial burden; it’s the biggest barrier to the Canadian dream of homeownership for many young Ontarians and their families.”
Parents Staying Put
In response to high housing costs, nearly half of the parents of these graduates surveyed plan to remain in their family homes for the next decade instead of downsizing. This choice contributes to the limited housing supply available in the market.
OREA President Tania Artenosi, a REALTOR®, expressed her concern, saying, “Student debt casts a shadow over this dream, leaving aspiring buyers caught between their educational ambitions and the desire for a place to call their own.”
Aspirations for Homeownership Persist
Despite carrying student debt, post-secondary graduates maintain a strong desire to own residential properties, with 75% expressing this aspiration. Moreover, over 80% of graduates support government interventions aimed at improving housing affordability.
To address the housing affordability crisis faced by young Ontario graduates, Ontario REALTORS® have proposed several recommendations:
- Collaboration between the Provincial and Federal government to allow graduates to reduce their OSAP loan by contributing to Canada’s ‘First Home Savings Account’ (FHSA). The government would match these contributions dollar-for-dollar.
- Permanent elimination of interest accumulation on Provincial student loans, aligning with the recent federal policy change.
- Extending the grace period for OSAP loan repayment from 6 months to 1 year, offering graduates more time to secure stable employment and save money.
- Enabling automatic notification to OSAP when graduates file taxes and receive their OSAP tax receipt, automatically enrolling eligible graduates into Canada’s ‘Repayment Assistance Plan’ (RAP).
- Collaboration with the National Student Loan Service Center to create an online financial education hub that provides essential information related to student loans.
By championing education financing support and advocating for policies that enhance housing affordability, Ontario can remove the barriers standing between young graduates and their dreams of homeownership.