Stuck with a massive monthly student loan payment? While that burden may be directly impacting your bottom line (like whether or not you buy store brand pasta for dinner or splurge for something more extravagant), it’s now impacting someone else’s bottom line, too: the U.S. housing market.

Collectively, Americans are dealing with over $1 trillion in student loan debt - a staggering number that’s surpassed all other consumer debt, including credit cards. While the statistic by itself is reason enough for this generation of student loan-saddled borrowers to feel discouraged, the effects it’s having on the mortgage industry are concerning everyone.

The level of debt carried by 20-somethings is not only affecting the financial stability of an entire generation, but it’s undermining the recovery of the housing industry.

Indebted graduates are likely forgoing homeownership for three reasons:

• They can’t afford to save for a down payment while burdened with student loan payments. With poor job prospects and lagging wages, college graduates are faced with a difficult choice when it comes down to their finances: saving for the future or paying the monthly student loan bill. With an average student loan debt burden of over $25,000, the choice becomes clear quickly: wait for homeownership.
• Those with student loan debt are less likely to qualify for a mortgage. A person’s debt-to-income ratio is becoming an increasingly more and more important factor as lenders assess a mortgage application. And that spells trouble for student loan borrowers with big balances and large monthly payments. A typical college graduate earning $45,000 a year and paying $500 a month in student loan payments may not qualify for a mortgage because too much of his or her monthly income is being consumed by debt payments.
• The next generation is debt-averse. This is the generation that saw their parents struggle to meet their own mortgage payments or even face foreclosure. It’s no wonder that indebted twenty-somethings are reluctant to enter into the housing market themselves. And even those that have already paid off their student loans may be more likely to forgo homeownership just to avoid having more debt again.