The Effect of the "Student Housing Boom" on the Debt Levels of Students: A Penn State Case Study

Open Access
- Author:
- Zachariah, John
- Area of Honors:
- Finance
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Mallory Marie Meehan, Thesis Supervisor
Dr. Brian Spangler Davis, Thesis Honors Advisor - Keywords:
- Real Estate
Student Housing
Higher Education
Student Loan Debt
Finance - Abstract:
- This paper intends to examine and quantify the effect of rising student housing prices on the outstanding debt levels of students. Previous literature was utilized to understand and discuss what is causing the “Student Housing Boom” in the United States, and whether this trend has affected students at Penn State. The primary analysis for this case study was conducted through an anonymous survey of Penn State students, which was used to calculate a “Rent-to-Income” ratio for each student, and was regressed against the student’s outstanding student debt upon graduation. The sample was stratified based on what tier their annual household income fell into: $0-$150,000 (Tier 1), $150,001-$300,000 (Tier 2), and $300,001+ (Tier 3). The regression analysis did not show a significant correlation between a student’s Rent-to-Income ratio and outstanding loan debt in any of the individual three income tiers. Although a weak relationship could be observed in the lowest income bracket and in the aggregated regression, more data points would be needed in order to come to any conclusion. An interesting trend in the correlation differential between each tier was observed, showing a growth in correlation between the Rent-to-Income ratio and outstanding student debt from the highest income bracket to the lowest income bracket. Although the analysis was largely inconclusive, further research should be conducted as the student housing boom continues to price into the housing market at Penn State and other universities. With the student housing market having the power to further ostracize students coming from lower-income households and worsen the affordability of higher education, it is essential that its growth be examined carefully.