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Report Finds That Subprime Mortgage Crisis Will Impact Lives of Two Million Children

“We often hear about the impact that the mortgage crisis is having on the stock market and on the nation’s economy, but we hear little about the impact this crisis is having on the lives of two million of our nation’s children.”

Over the next two years, approximately two million children will be directly affected by the subprime mortgage crisis, according to The Impact of the Mortgage Crisis on Children, a new report from First Focus, a bipartisan children’s advocacy organization. The report also finds that, in addition to being forced from their homes, children affected by the housing crisis also see their educations disrupted.

“We often hear about the impact that the mortgage crisis is having on the stock market and on the nation’s economy, but we hear little about the impact this crisis is having on the lives of two million of our nation’s children,” said Bruce Lesley, president of First Focus. “When families lose their homes, kids often lose their schools and access to services. Such changes not only impact their education but their physical and mental health as well.”

According to the report, “mobile students,” or students that change schools often, are less likely to be proficient in math and reading than their stable peers. It also finds that mobile students are more likely to be held back and eventually drop out. As evidence, the report points to a government student that 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,” it reads. Student mobility is also associated with poor and delinquent behavior and negatively affects a child’s health. On the other hand, stable housing has been shown to correlate with more positive health outcomes, such as better nutrition and a healthier body weight.

Because the housing crisis has affected such a wide swath of the country, each state has significant numbers of children impacted by it; estimates in the report range from one thousand children in North Dakota to 311,900 children in California and a total of 1.95 million throughout the United States. First Focus cautions that its overall estimate is likely to be on the low end as it does not include children who are evicted from rental units that are going into default, nor does it include children whose parents default on conventional loans.

In an effort to limit the number of children affected by the housing crisis, First Focus offers several recommendations to the federal government. First, it calls on Congress to better regulate mortgage lending practices, provide targeted strategies to reduce the number of foreclosures, and invest more in affordable housing. It also suggests that Congress provide an emergency, one-time, infusion of funds to the Emergency Food and Shelter program to prevent families facing foreclosure from becoming homeless. For students who are already homeless, it recommends additional funding for the McKinney-Vento Homeless Education program, which allows students who are forced from their homes to stay in their schools even if they move out of the school district. The program also provides homeless students with a variety of supports, including tutoring, school supplies, and counseling.

“As the federal government continues to cut interest rates and take other actions to minimize the impact of the economic downturn, it is critical that they also address the needs of our nation’s children, who are innocent victims in this crisis,” Lesley said. “If nothing is done, children will continue to be impacted in a variety of respects that will have long term repercussions on their lives.”

The complete report is available at

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