Seven in 10 young people with student loans who are saving for a home say repayments are making it harder to build a deposit, new research reveals.
OneFamily estimates the finding is equivalent to more than 1.5 million people aged between 18 and 40, raising concerns that student loan repayments are adding to the financial barriers facing aspiring first-time buyers.
The Lifetime ISA provider surveyed 2,000 adults aged 18 to 40 about their financial habits and attitudes.
Among those with a student loan who are saving towards a property, 70% say repayments are making it more difficult to save enough for a deposit.
‘RENT AND REPAY’
The research suggests student debt is adding to existing pressure from rents and wider living costs, potentially leaving some prospective buyers renting for longer.
Almost a third (29%) of all respondents with a student loan say the debt is holding them back from achieving their life goals, while 27% regret going to university because of the amount they owe.
Younger borrowers appear particularly concerned about the impact on their finances.
Almost half (48%) of Gen Z respondents say their student loan limits their financial options, compared with 29% of Millennials.
Some 40% of Gen Z borrowers are worried about their student loan, compared with 26% of Millennials.
DEPOSIT PRESSURE
OneFamily also finds that 99% of those saving for a home would put at least some of the money freed up towards that goal if their student loan repayments were removed.
Beth Tait, Personal Finance Champion at OneFamily, says: “There are already a huge number of barriers making it challenging for young people to buy their first home.
“It’s a big life goal and more needs to be done to help people achieve it. Right now, thousands are stuck in a ‘rent and repay’ trap – juggling high costs, as well as their student loans, making it difficult to put aside much at the end of the month.
“It’s worrying to see so many feeling stuck in a cycle that is difficult to break out of.
“There are solutions out there, like the lifetime ISA, to help young people manage their money and reach their life goals.
“But there is still much more work to do in terms of financial education and resources to help this generation save and build financial resilience.”
