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Student Loan Debt Contributing to Declining Home Ownership

Student Loan Debt Contributing to Declining Home Ownership

“Outstanding student loan debt surpassed $1.5 trillion in 2018 – second only to mortgage debt”

This is one of the reasons why so many young people are attracted to ideas like free college and socialism.

FOX Business reports:

Mounting student loan debt stopping young Americans from buying homes

The declining U.S. home ownership rate can be partially attributed to rising levels of student loan debt, a new study found.

According to researchers at the Federal Reserve Board Division of Research & Statistics, a $1,000 increase in student loan debt can cause a 1 to 2 percentage point drop in the homeownership rate for borrowers during their late 20s and early 30s. The homeownership rate among young Americans fell nine percentage points between 2005 and 2014—and rising student debt accounted for about one-fifth of the overall decline during that time period.

If not for those increased student debt burdens, an additional 400,000 young Americans would have owned a home by 2014, researchers concluded.

Outstanding student loan debt surpassed $1.5 trillion in 2018 – second only to mortgage debt – doubling over the past decade.

But the effects of mounting debt reach beyond buying a home. The Fed study found that higher debt burdens negatively impact borrower’s credit scores – which can not only affect their ability to obtain a mortgage, but nearly all other types of credit as well.

The Fed concluded that the benefits of secondary education – including higher wages in some cases – are being “lessened” by the burdens associated with increasing student debt loads.


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amatuerwrangler | January 21, 2019 at 8:45 pm

If those students would have participated in a trade program they would, at the end of 4 years, have journeyman papers as carpenter, plumber, electrician, HVAC technician, on and on, and job offers to consider rather than life choking debt.

    But, there’s always one, few of the people you are referring to have even picked up an adjustable wrench and if you asked one of them to hand you a Phillip’s head screwdriver, they might simply run away.

    Another reason your idea is brilliant but doomed more than likely is the social status barrier. All their art-major barista friends might not invite them to their parties when they discover that you may have repaired a toilet earlier in the day.

    Mike Rowe and I agree wholeheartedly with you.

      amatuerwrangler in reply to Philip. | January 22, 2019 at 11:11 am

      Agreed, but…. When the heater crashes at the Starbucks Xmas party, those art historians will see things in a different light (unless the power goes out, too). It will be a real-life version of the “Rudolph the Red-Nosed Reindeer” story.

      Party-goer:”Wait. She gets how much an hour to fix the stupid furnace??!! Get out!!”

Who could not see this coming? Before I retired my practice had evolved into primarily Consumer Bankruptcy. I saw massive amounts of student loan debt which could not be discharged unless you could prove from a practical standpoint that the client was ever going to be capable of earning even a subsistence living. This continued on into graduate school. Most of these people, see my shocked face, had majored in courses that were designed for social justice warriors and they were never going to be capable of paying these loans back. One woman had school loan debt of over $150,000 and she was working as a school social worker essentially lobbying her employer for leftists causes (Gimme, Gimme, Gimme.). Meanwhile, the colleges were able to pay ever and ever higher
and ridiculous salaries to their leftists professors and administrators. You can see how this works-higher and higher.
Oh, and Elizabeth Warren and her study “proving that medical debt was the primary cause of many bankruptcies” forget it. In 99 and 44/100 PerCent of the thousands of cases, I handled medical debt was never a major factor.

U.S. mortgage debt rises to $8.8 trillion. As of Dec. 31, Americans are $13.15 trillion in debt. That’s $193 billion more than the quarter before, according to the latest data released by the Federal Reserve Bank of New York. … Americans owe a total of $8.88 trillion in mortgages loans.

Just sayin.

It’s the reverse of Social Security.

What these young current students don’t realize is that by the time any of these socialist “free college” measures were enacted, they’d be done. They’d be paying more taxes for the next group to go to college for free and their loans would not be discharged. It can’t be done because the debt is too high.

Rule number 2 | January 22, 2019 at 8:09 pm

Regarding the trade school alternative: keep in mind that the US military is one of the best and most diverse trade schools in the world. A wise choice of MOS can be a huge leg up in a technical career, positioning the young person ahead of his peers and debt free.