What’s going on here? How can colleges keep hiking their rates?
Simple: They’re putting the increased costs on the backs of students, who are taking out loans in record numbers.
Student debt growth is staggering: $1.2 Trillion in student loans are on the books. The only kind of debt that eclipses this: Mortgages.
The result: Student loans are killing housing, eliminating potential first-time homebuyers from the market for years.
Brookings research says that among the poorest households, those making less than $21,044 a year, monthly student loans consume a stunning 24% of their income.
But what’s more alarming: Among middle-income households that make between $36,724 and $59,623, student debt consumes 12% of their income.
Under today’s mortgage rules, or even yesterday’s mortgage rules, how the heck is a first time buyer going to buy a home if 12% of their income is going to pay off their school loans.
The National Association of Realtors data says that 56 percent of Gen Y and 35 percent of Gen Xers delayed saving for a down payment because of student loan debt.
Want to buy a house Gen Y? Fagettaboutit.
Not all of you are software developers making gazillion dollars a year. A lot of them are teachers and service professionals, starting off at $10 an hour. But they have $50-to-$75k in student loans. Go see your Realtor in about a decade when your college loans are paid off.
Are you kidding me? WTRF – R standing for Royal.
Finally, to add insult to injury, colleges are building the most incredible student unions ever. My undergraduate Alma Mater, University of Miami, sent me a magazine last month with what has to be the most incredible building on campus.
My last visit to my grad school, USC, I saw the same thing: A beautiful newer facility – nothing like the old bookstore that it replaced. Even my wife’s school, Washington State, has a Student Union facility with a Clinique counter.
I wonder where they got all the money to pay for these edifices?
We need to rethink how colleges and universities are impacting housing and our economy in every way, good and bad.
Then let’s fix it, because it’s broke.