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Florida may be known as a tourist mecca, what with Miami’s metropolitan nightlife and Orlando’s Disney World, but the truth is that Florida is made up of lots and lots of families who love their Sunshine State.  We’re proud of our roots and there’s no time like the Holiday Season for families all over Florida to stop and appreciate things.

One of those things?  Parents and kids living together under the same roof.  Time was in the past, there were parents who were getting older and mom or dad would be moving into their children’s homes in their advancing years.  That’s still happening today.

However, more and more here in Florida and across the country, children are returning home to live with their parents – particularly those who have graduated college and are in the 25 to 34 year old age group.  These young adults are moving back home because in the current down economy, they cannot find jobs, or the jobs they have pay so little that they can’t make it on their own.

The Boomerang Generation

So, they go back to their parents’ home to re-group.  It’s what loving parents do, help their children out.  That’s a good thing, and something that Floridians can be proud of — our family ties.  (Even if there are some people out there that are skeptical of this.)

According to a TIME magazine, 85% of the Class of 2011 was planning on moving back home after graduation this past May 2011.  There’s even a new catchphrase for this group: the “Boomerang Generation.”

However, it’s important to remember that these kids should continue to plan on building their own families, marrying and having kids of their own, and buying their own homes here in Florida.  A big part of that plan will be their credit history and their ability to show responsibility to pay off debt.  Which brings us to the news this week about college graduates all over the country these days:  they are defaulting on their student loans.

From nationally known real estate analysis firm John Burns Real Estate Consulting comes a warning about tomorrow’s housing market: it seems that there is more  student loan debt on the books now than the total credit card debt owed by Americans today COMBINED with the total of all the other kinds of household debt (if you don’t count home loans or mortgages in the tally).

Default on Student Loan Today and You May Be Nixing Your Chance at Home Ownership Tomorrow

They are reporting that student loan debt in the United States is $865 billion. Which is high, but okay, except for the fact that these college graduates are having financial difficulties and many of them aren’t paying on their student loans.   Lots of college graduates are defaulting on their student loans (average amount owed?  $25,000) and it’s predicted more are going to just stop paying in the future.

According to the analysts, there are around 6 million kids who have graduated from school and ended up back home with mom and dad — and it’s a shocking 26% increase from the number that did this back in 2007.   And, get this:  home ownership for 30 to 34 year olds is at the lowest point it’s been since 1994.

This is sad, sad news for Florida graduates – Gators, Hurricanes, etc. – who went off to college and achieved that college degree only to find that the economy has tanked and there aren’t jobs out there so they can put all that hard work to good use.

Planning for a Brighter Future – Including Buying Your Own Home

However, we must be confident that the Florida economy will bounce back – that we will see better days.  Part of that will mean these young adults will have jobs and a brighter future than they may foresee right now, as they mow their parents’ yard or wash the dinner dishes at the same home where they graduated high school.

For example, the U.S. Census Bureau reported last month that the national home ownership rate ticked up in the third quarter of 2011 as compared to 2011, with some thinking that this might mean that the past 3 years of falling rates in American home ownership might have hit rock bottom.  It’s too soon to tell for sure, but it’s a hopeful sign.

Defaulting on Student Loans Now Can Hurt Chance for Home Ownership Later

So, right now one thing these graduates can do to protect their future and those brighter days is to protect their credit rating now.  Defaulting on a student loan casts a long shadow on a credit record and it can keep a buyer from getting a home loan.   Sure, the fact that they have a student loan means that they have debt and may qualify for a smaller note than someone without that debt burden.  However, if the record also shows they have failed to pay on their student loans, then getting that home loan will be much more difficult.

Student loans are contracts where you have agreed to pay a certain amount of money every month – and a breach of that deal can haunt you for years.  For parents and kids it’s important to remember: defaulting on a student loan may mean problems buying a home in the future, so don’t do it if you can keep from doing so.

There’s not much legal defense to just walking away from a student loan.  However, if you have special circumstances then a real estate attorney may be able to assist you.   If you think that a Florida business lawyer can help you and your situation, then don’t procrastinate – learn what your legal situation truly is and what your options are.

For more information on how your credit rating impacts your home ownership dreams, read our earlier post here discussing FICO scores.

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