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Go Big or Buy a Home: The Impact of Student Debt on Career and Housing Choices

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  • Marc Folch

    (OECD)

  • Luca Mazzone

    (University of Montreal)

Abstract

Student debt decreases post-bachelor school enrollment and earnings growth but does not delay first-time home ownership. We introduce a life-cycle human capital model with wealth heterogeneity and financial frictions and show that high debt balances distort career choices because returns to further education depend on current income. Student debt impacts home ownership in two ways. First, it deters ownership via the traditional wealth channel. Second, it increases ownership by discouraging further education in favor of early labor market entry. Finally, we discuss the impact of student borrowing under different loan repayment schemes. (Copyright: Elsevier)

Suggested Citation

  • Marc Folch & Luca Mazzone, 2026. "Go Big or Buy a Home: The Impact of Student Debt on Career and Housing Choices," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 59, January.
    • Handle: RePEc:red:issued:24-180
    DOI: 10.1016/j.red.2025.101317
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