The Impact of the Mortgage Crisis on Children and Their Education

By: Owusu A. Kizito, EA/MBA

We know that the mortgage crisis is wreaking havoc on the stock market, on the housing industry, and on our economy as a whole. But there are 2 million voiceless victims of this crisis about whom we hear little. Largely over the next 2 years, an estimated 2 million children will be directly impacted by the mortgage crisis as their families lose their homes due to foreclosures. These children are not just losing their homes, but they also risk losing their friends, schools, and in many ways, their childhood.

 The Problem

When foreclosures force children from their homes, their education is disrupted, their peer relationships crumble, and the social networks that support them are fractured. Indeed, their physical health, as well as their emotional health and well-being, is placed at risk. As a result, our attention must turn to the unintended and often unnoticed impact of the credit crunch on our nation’s children and their education. The Center for Responsible Lending projects that one out of every five subprime mortgages that originated in the last couple of years will go into foreclosure. The silent sufferers of these foreclosures are the 2 million children and youth who are losing their homes, ranging from 1,000 children in North Dakota to 311,900 children in California. This estimate is based out of projected foreclosures of 2.26 million single-family homes, which does not include those children being evicted from rental units that are going into default, nor does it include children whose parents default on conventional loans.

Across the country, school districts are seeing spikes in the number of homeless children entering their classrooms, much of which is being attributed to the mortgage crisis. For example, as of April 1 2012, schools in Cleveland, Ohio, served more than 2,100 homeless students—a 30 percent increase from last year. Schools in Fairfax County, Virginia, had served 1,356 homeless students as of April.

Educational Impacts of Mobility

Research shows that children who experience excessive mobility, such as those impacted by the mortgage crisis, will suffer in school. The National Assessment of Educational Progress (known as the Nation’s Report Card) has found that students with two or more school changes in the previous year are half as likely to be proficient in reading as their stable peers. Math performance can also suffer, as a government study found mobile third grade students to be nearly twice as likely to perform below grade level in math, as compared with those who had not changed schools.

Not only do mobile students do worse in reading and math, they are also more likely to be held back and eventually drop out. A U.S. government study found that third-graders who have changed schools frequently are 2.5 times more likely to repeat a grade than their peers. Other researchers have found that school and residential changes can reduce the chances that a student will graduate by more than 50 percent.

Behavioral Issues in Children

We should not be surprised to learn that student mobility is also associated with poor and delinquent behavior. When students are forced to change schools, some children may try to fade into the background, while others will get into fights at the new school in order to “fit in.” One study found that frequent movers were 77 percent more likely than children who have not moved to have four or more behavior problems. Another study, tracking 4,500 young people in California and Oregon from middle school through high school, found that attending several different elementary schools increased the likelihood of violent behavior in high school by 20 percent.

 Child Health Consequences

The mortgage crisis also places a child’s physical health at risk. As families receive their foreclosure notices, they are forced into housing that, while less expensive than the homes they have lost, are still beyond their means. One study found that working families spending more than half of their income on housing have less money available than other families to spend on such crucial items as health care and health insurance. Stable housing has also been shown to correlate with other health outcomes, from better nutrition to healthier body weight.

Policy Solutions

The mortgage crisis is more than a blow to our economy. It is crippling our children, their education, and as a result, the nation’s future. And while our government is working to alleviate the financial damage caused by this calamity, the impact on the nation’s children is going unnoticed. As economists focus on solving the problem, policy-makers must make a concerted effort to mitigate the damage of this disaster on our young people.

We call on Congress to respond to the mortgage crisis with a multi-level response, including improving regulation of mortgage lending practices to avoid a repetition of this crisis, crafting targeted strategies to reduce the number of foreclosures under the current crisis, and providing assistance to diminish the negative impact on children and families who do face foreclosure. In addition to these immediate responses to the current crisis, action must be taken to increase the availability of affordable housing for low-income families. In addition to broader changes aimed at improving the functioning of mortgage markets, Congress should provide an emergency, one-time, infusion of funds to the Emergency Food and Shelter program to prevent families facing foreclosure from becoming homeless, as proposed by the Emergency Housing Assistance Act of 2008. These funds would provide such assistance as mortgage/rent payments, utility payments, and other housing-related assistance to help prevent families from losing their homes. Additionally, providing an infusion of funds to school districts across the country through the McKinney-Vento Homeless Education program would help ensure that

students who are forced to move from their homes do not also have to leave their schools. McKinney-Vento allows homeless students to stay in their schools even if they are forced to move outside the school district. In addition, the program provides homeless students with a variety of supports, such as tutoring, school supplies, and counseling, among others, to help stabilize their education even though the rest of their lives are fraught with uncertainty.

The mortgage crisis is impacting lower income families who rent as well as families who own their homes. The National Affordable Housing Trust Fund Act, already passed by the House of Representatives, would create an estimated 1.5 million units of affordable housing over the next 10 years, targeting lower income renters. This investment in affordable housing, combined with improved regulation of the mortgage lending industry, will help to prevent this chapter of our nation’s history from repeating itself.

Children Should Not Be an Afterthought

Adults caused the mortgage crisis. Children are suffering because of it. The situation will not be solved over night, but we can help to ease its impact. As we lower interest rates, spend our stimulus checks, and provide support to the home building industry, let us not forget that the only hope our country has of strengthening our economy over the long term is through supporting the home buyers of the future.


Lovell, Phillip, Isaacs (2008). “The Impact of the Mortgage Crisis on Children and their Education.” Washington, DC: First Focus.  

Rhodes & Virginia (2005). Kids on the Move: The Effects of Student Mobility on NCLB School Accountability Ratings, Penn GSE Perspectives in Urban Education, Vol. 3, Issue 3.

These data were provided by the National Association for the Education of Homeless Children and Youth, representing the homeless liaisons serving homeless children in school districts throughout the country.


Posted by on Apr 13 2013. Filed under Community News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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