The student debt crisis has been bubbling for decades and finally reached a boiling point in the most recent election cycle. While nothing has been done about it quite yet, there’s certainly enough publicity to eventually put pressure on lawmakers to make some positive changes. But there’s another student crisis starting to simmer beneath the surface and it’s not getting nearly enough attention.
The Emergence of a Student Housing Crisis
Whether it’s the southeast, northeast, or west coast, student housing is becoming dramatically less affordable by the semester. Whether it’s on-campus housing that’s managed by a university or private off-campus housing, there’s considerable scarcity and greatly inflated prices.
Some of this has to do with the fact that savvy real estate investors are buying properties as investments. Real estate in college towns is highly attractive and offers a number of opportunities - including buy and hold, rentals, and flips.
But private investments from parents and individual investors aren’t the issue. Instead, it’s the lack of student housing amidst growing student body populations. Couple this with the rise of new real estate developments that have a captive audience and significant debt to pay down and you get incredibly high off-campus housing rates. Students are either forced to pile lots of people into small rental units or move further off campus to get away from the steep prices. Neither scenario is ideal.
Solutions for Affordable Student Housing
The good news is that there are solutions that could make student housing more affordable.
The University of California at Berkeley is a good example. The median apartment rent in Berkeley is $3,500 per month. Just to obtain a shared room in a house near campus, some students have to fork over as much as $1,500 per month. But an unlikely partnership between students and retirees could pave the way for more affordable housing.
Just last year, the staff at Berkley’s Retirement Center began strategizing about how they could bring the two groups together. They ended up winning a grant from the chancellor’s office to launch a pilot program that will match six students with senior hosts this spring semester.
The hope is that a solution like this would allow students to pay below-market rent – ideally less than $1,000 per month – while giving seniors an extra revenue stream and a new sense of community.
While the dollar amounts may not be as high in Athens, Georgia, students at the University of Georgia are – when adjusted for cost of living factors – facing an equally challenging student housing market.
The price of housing has gone up dramatically in the past few decades – as much as 72 percent from 1995 to 2015. The city has a larger share of renters than almost any other city in the country – 62 percent – and the majority of new multifamily housing complexes that have emerged in recent years are significantly overpriced. A viable solution has yet to be determined, but the local housing authority considers this its most pressing issue.
Locally, new student housing projects continue to be built. As rent prices increase, many are fearful that similar problems will emerge for Penn State students. However, there is a silver living. Penn state has reported that its undergraduate and graduate student enrollment will remain relatively flat for the foreseeable future. In fact, there was an estimated surplus of 255 dorm spaces in 2018. This created an opportunity for 100 percent of freshmen and a large percentage of other students to remain on campus at affordable rates.
Penn State Vice President for Student Affairs Damon Sims is adamantly against the development of housing options that put students miles away from campus. He believes this makes it much more challenging for them to participate in on-campus activities that shape the student experience.
The combination of creative community partnerships, sustainable student enrollments, and better on-campus housing could be the solution to astronomical student housing costs. But until this subject gets more national exposure, it’ll continue to be an issue.
Finding Middle Ground
Real estate is a commodity and there will always be a competitive marketplace for housing. So to say that student housing should be free or heavily discounted would be doing a disservice to the principles of a free enterprise market. However, we have to find some sort of middle ground where students have access to affordable housing that prevents them from digging themselves even further into debt.
The more conversation there is about this topic, the sooner we’ll find viable solutions.