Our Role in Financing Student Housing
Any parent who has a child in college knows that housing is one of the most important considerations. Whether paid for out of pocket or through loans, the amount of total college expenses consumed by room and board is substantial, and can easily run at least $7,000 a year.
Did you know that, as part of our mission, Freddie Mac helps students have access to affordable apartments near colleges and universities? Our Multifamily housing area purchases loans from lenders for apartment complexes, which includes housing for low- to moderate-income individuals – often senior citizens and college students.
Last year, we purchased almost $17 billion in multifamily loans, which accounted for 37 percent of lending in the market. Of this amount, $775 million was for off-campus student housing near colleges and universities across America. Most recently, we purchased more than $27 million in loans for University Club apartments, serving University of North Carolina students in Charlotte; Copper Beech Townhomes near Penn State University; and Campus Habitat 7 close to Central Michigan University.
Students say housing is one of the factors they look at when choosing a school, and colleges and universities use housing as a recruiting tool. For students, bland living quarters are out and apartments with amenities are on the way to becoming the norm. This market sector has gone from dormitory style housing to complexes with fitness centers, Wi-fi, meeting spaces, and movie rooms.
Keeping the student housing financing market liquid is critical, especially given the growth this industry has experienced over the past two decades. Consider these facts: more young people attend college than ever before, with enrollments at 20 million students; more than two-thirds of high school graduates attend college; and fully 7 percent of the U.S. population lives in student housing.
The recession is one reason for increased enrollments. Because jobs are harder to find during a recession, more people head to college or stay there longer.
Freddie Mac has had a dedicated student housing product since 2008. We help provide capital to the market by purchasing multifamily loans so lenders have a stable supply of money to lend. Sometimes we securitize these loans, then sell them to investors as multifamily mortgage-backed securities, which we call K Certificates.
No matter the economy, Freddie Mac has remained a reliable, stable source of liquidity for the multifamily and single-family marketplaces. In today's challenging environment, we've remained focused on implementing a business plan that keeps the multifamily mortgage market liquid, supports affordable housing, conducts responsible lending, and invests in our future. And part of that future includes providing mortgage capital to the student housing financing sector.
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