Millennial Home Ownership Crippled by Student Debt

Student debt has put those in the Millennial generation at a disadvantage when it comes to turning their education into wealth, particularly in the form of home ownership.


In a study released today, Legal & General Group argues that student debt has affected the Millennial generation more adversely than any other age cohort, with many 25-year-olds to 40-year-olds feeling financially crippled by the skyrocketing cost of college tuition at a crucial point in their lives—and in an economy struggling to recover.

These findings are part of broad new study, “U.S. Millennials and Home Ownership – A Distant Dream for Most,” which examines the role of student and medical debt in creating a “vicious cycle” that keeps many Millennials from saving and building credit to purchase their own homes.

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The study suggests that a significant number of college-educated Millennials feel student debt has affected their ability to buy a home, with 40% of those surveyed reporting that it has had a “moderate” to “very strong” negative impact on their plans.

According to the study, as of November, Americans owed $1.75 trillion in student loans. The skyrocketing cost of college tuition, coupled with catastrophic economic events such as the 2008 financial crisis and the COVID-19 pandemic, have left many Millennials in poor financial shape. Recognizing this dynamic, the study analyzed the financial standing of Millennials who were not yet homeowners to uncover some of the reasons why and to identify potential solutions.

The study shows that for 45% of Millennials, funding a down payment for a home is their top priority, with 36% calling student debt a major barrier to saving for a down payment. When asked which they would fund, 26% say they would pay off their student loans before anything else. Another 12% say the same about medical debt.

In total, the study shows that 52% of Millennials were not saving for a down payment, while 48% were. Of those who were saving, 80% plan to fund the payment exclusively or mostly from their own or a partner’s savings, and 22% plan to use a family loan, gift or inheritance to fund a down payment. Among the savers, 55% can’t buy yet, and 36% have yet to start a savings account for this purpose. Another 36% do have a savings account.

Millennials who don’t have the benefit of help from family are at a disadvantage in accumulating the sort of wealth afforded by becoming property owners, the study suggests. This group is also more likely to have had to fund their own education.

“Student loan debt is a leading contributor to the economic imbalance our research identifies, meaning that saving for a down payment to purchase is a distant, rather than near-term, goal for many U.S. Millennials,” says Sir Nigel Wilson, Legal & General Group CEO. “It has put this generation at a considerable disadvantage in terms of parlaying their hard-won education into wealth, in the form of home ownership.”

In addition to student loans, the study suggests more Millennials are shouldering their own health care costs. Among Millennials the study surveyed, 51% had received an unexpected medical bill over $2,000, while only 60% held their own health insurance. Out of those facing a large bill, 57% of Millennials surveyed said they had $3,000 or less in savings out of which to pay it, while 22% indicated that they had no savings.

“Traditionally, health insurance in the U.S. has been a benefit provided by corporations to their employees. But a confluence of factors, from the Great Recession to the rise of the gig economy, have affected the degree to which younger Americans were covered during this critical time, or had to purchase their own policies,” says John Godfrey, report co-author and Legal & General corporate affairs director. “When you add the cost of health insurance plans and medical debt to the student loan burden, it’s less surprising that the percentage of U.S. Millennial homeowners is at a historic low.” 

T. Rowe Price Agrees to Settle Proprietary Funds Lawsuit for $7 Million

The lawsuit against T. Rowe Price had accused the firm of filling its retirement investment menu with proprietary funds.



T. Rowe Price has reached a preliminary settlement agreement with retirement plan participants to resolve a fiduciary breach claim brought against it under the Employee Retirement Income Security Act (ERISA).

According to the motion for preliminary approval, T. Rowe Price has agreed to contribute $7 million into a qualified settlement fund. In addition to the monetary terms, the preliminary settlement includes a requirement that T. Rowe Price offer a brokerage window providing access for retirement plan participants to nonproprietary funds. The agreement requires court approval.

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The class action settlement comprises all participants and beneficiaries in the T. Rowe Price U.S. retirement program who had a balance in a plan account at any time from February 14, 2011, through the date of entry of the order preliminarily approving the settlement, the memorandum of law states. The settlement agreement requires the defendants to make available to participants a brokerage window option for the duration of the settlement period and to permit plan participants to allocate all or a portion of their plan balances to investments provided through the brokerage window.

The defendants deny all allegations of wrongdoing and deny all liability for the claims in this action.

The plaintiffs’ class had claimed that T. Rowe Price violated its fiduciary duties under ERISA by restricting access to solely T. Rowe Price funds. In the complaint, the plaintiffs accused the plan’s trustees of breaching their fiduciary duties under ERISA by either failing to remedy their predecessors’ breaches or, in some cases, offering expensive retail class versions of propriety mutual funds and waiting too long to shift to lower cost versions of the funds.

The defendants argued that plan documents required the plan’s trustees to select an exclusive lineup of T. Rower Price funds. The plaintiffs asked an appellate court to consider whether a document mandating that T.  Rowe Price funds be offered in its 401(k) plan violated ERISA. The interlocutory appeal on the document issue was denied.

Previously, Chief Judge James K. Bredar of the U.S. District Court for the District of Maryland dismissed the defendants’ argument and allowed the lawsuit to proceed.

“Regardless of the reasons that T. Rowe Price may have chosen to restrict the trustees to investing only in in-house funds, it does not provide a blanket defense for the plan trustees. The plaintiffs’ allegations that related to the use of the more expensive retail funds rather than commercial funds, the allegations that related to retaining chronic underperforming funds, and the allegations that related to seeding remain plausible. The plaintiffs provide specific examples, not merely conclusory statements, and the court is required to accept those factual allegations as true at this stage of the proceedings. The defendants argue with regard to each one of the plaintiffs’ theories that the allegations, standing alone, are insufficient. But the plaintiffs have alleged multiple grounds to support their claim; the allegations related to any one theory do not stand alone but must also be reviewed as a combined set,” Bredar wrote.

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