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Student Loans Didn’t Stop Me From Achieving My Homeownership Dreams, Thanks to This Federal Program | Opinion

By admin_dev
August 21, 2024
For many families with low incomes, the path to homeownership feels like an elusive dream, obstructed by seemingly insurmountable barriers such as insufficient savings, lack of credit history, and low wages which simply cannot meet the high costs of living and current inflation levels.

Things have only got more difficult since student loan payments resumed last year for millions of borrowers across the country. Pursuing higher education, once a pathway to better job prospects and higher wages, has now become an additional barrier for low-income families striving to build wealth.

I know this struggle all too well. After graduating high school and having my first child, I pursued a career in education, first obtaining a certificate in child care and then earning my bachelor's degree. I took out $12,000 in loans to help pay for my degree. I've been making payments toward my loans for years. But with interest rates so high I now owe almost $30,000.

Despite my hard work, I struggled to make ends meet and lived in HUD-assisted housing as I began my career. But I found out about a little-known initiative from the Department of Housing and Urban Development (HUD), the Family Self-Sufficiency (FSS) program. This program provided financial guidance and empowered me to purchase my first home while managing student loan debt.

My housing provider, Boston Housing Authority, partnered with the nonprofit Compass Working Capital to offer FSS. When I first heard about Compass Working Capital's FSS program, I was intrigued but skeptical. Could this be real? I decided to take a leap of faith and enroll. From the very beginning, I was met with a team of dedicated professionals who were genuinely invested in my financial well-being and future.

Here's how I made it happen—as my income increased, a portion of my rent was set aside in an escrow savings account, which allowed me to accumulate significant savings without feeling the immediate financial strain. With the support of a Compass financial coach, I learned strategies for managing and paying down my debt while simultaneously saving for a down payment on a home. After three years of disciplined saving and planning and a combination of funding from the First Home Program, Mass Housing and Urban Edge, I finally achieved my dream of purchasing a home for my family.
Damali Omolade is a Boston-area resident and Compass Working Capital client.
Yet despite its proven success, FSS participation rates remain lower than they should be.
Research shows that graduating households build more than $8,000 in savings on average and increase their annual earned income by more than $10,000. One to three years after enrollment, Compass Working Capital participants had annual household earnings that were on average 21 percent higher.

Most people who are eligible either don't know about or utilize the FSS program, believing, that it's simply too good to be true. Only about 57,000 households participate out of an estimated 2.2 million that could benefit.

Programs like FSS are a great engine for economic mobility for Black and Latino families with low incomes who have historically been disadvantaged economically. Families led by Black women hold just 5 cents for every dollar of median wealth held by families led

by white men. The U.S. Department of Treasury estimated that Black and Hispanic/Latino households have a homeownership rate of 45 percent and 48 percent, respectively, while the homeownership rate for non-Hispanic white households is 75 percent.

The FSS program can help narrow this persistent racial wealth gap, but only through sustained investment from the government to optimize it. Congress can improve the program to make it easier for families to enroll and reap the benefits. Senators Jack Reed (D-R.I.) and Katie Britt (R-Ala.) have introduced legislation to test automatically enrolling eligible families, with the choice to opt-out without sanction. This approach could make a huge impact, ensure more people participate, and eliminate administrative hurdles related to outreach and program implementation.
As I settle into my new home, I reflect on the journey that brought me here. I am beyond grateful for the FSS program and the dedicated Compass staff who believed in me and supported me every step of the way.

As we continue to address issues of wage disparity, affordable housing, and burdensome student loans which drives economic inequality, we must recognize and invest in existing programs like FSS that provide the tools and support necessary for families with low incomes to realize their homeowning dreams.
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