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Why Student Loans Are Crushing The Housing Recovery In 1 Chart

Tyler Durden's picture


As The WSJ reports, loan-application data show clear signs of growing student-debt burdens. Through the first half of this year, applicants with student debt carried more than $35,000 in student loans. As most people know, a key metric that mortgage underwriters use to evaluate a borrowers' ability to repay a loan is their total debt-to-income ratio.

It’s this metric that can make student loans a big negative in the loan approval process since new rules that took effect this year place greater legal liability on lenders to properly verify 'affordability' (or debt-to-income ratio). As the following chart shows, and one lender noted, "between the approved universe and the denied universe, a few hundred dollars in student loan debt can push the debt-to-income above the approved threshold."

Simply put, homeownership rates will face pressure until student borrowing slows or until mortgage investors and lenders come up with either more flexible underwriting tools or new loan products (and that never ends well).

As The Wall Street Journal reports,

Data from a top national lender shows that loan applicants with student loans aren’t being turned down more often than those without debt. But the data also show that even small changes in the size of a loan applicant’s monthly debt payments can make a big difference in whether a loan gets approved.




The loan-application data show clear signs of growing student-debt burdens. Through the first half of this year, applicants with student debt carried more than $35,000 in student loans.




A key metric that mortgage underwriters use to evaluate a borrowers’ ability to repay a loan is their total debt-to-income ratio, and it’s this metric that can make student loans a big negative in the loan approval process. New rules that took effect this year give lenders greater legal liability if they don’t properly verify a borrower’s ability to repay a mortgage. Those rules give a greater legal shield to lenders if they verify a borrower’s total debt-to-income ratio is no greater than 43%, which means borrowers with total debt that exceeds 43% of their income could put them at greater risk of being denied.


The LoanDepot data shows little difference in average debt-to-income ratios or credit scores for loans that were and weren’t funded. But it does show that, so far this year, loan applications that weren’t funded had almost $500 in monthly student loan payments, compared to around $300 in monthly payments on applications that were approved.






“Between the approved universe and the denied universe, the [borrower’s] credit is the same. The fundamental difference is a few hundred dollars in student loan debt that pushed the debt-to-income above the approved threshold,” said Anthony Hsieh, the chief executive of


These numbers mirror the concerns of some housing analysts, who say that young adults often don’t realize how signing up for thousands of dollars of student debt could hurt their ability to borrow later. “The continual feedback that I hear from the millennials is, ‘I had no idea what I signed up for and what this meant,” said Mollie Carmichael, a principal at John Burns Real Estate Consulting, at a conference last month.




“We’re a slave to the model,” says Mr. Hsieh. Lenders throw the borrowers’ credit and income information in “and see what comes back out.”

*  *  *
The upshot is that homeownership rates will face pressure until student borrowing slows or until mortgage investors and lenders come up with either more flexible underwriting tools or new loan products... which ended so well last time...


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Tue, 08/05/2014 - 21:04 | 5051947 Cognitive Dissonance
Cognitive Dissonance's picture

I made $9500 last month doing.......Oh wait......

My son and his betrothed recently purchased a home and her student debt weighted heavily on their credit worthiness. It was definitely taken into the overall calculation of their debt to income ratio.

Tue, 08/05/2014 - 21:04 | 5051957 JuliaS
JuliaS's picture

I made $9501... but then lost it all in a tragic boating accident.

Tue, 08/05/2014 - 21:19 | 5052001 DoChenRollingBearing
DoChenRollingBearing's picture

I am interested in young people's opinions on the whole Student Loan Debacle, and how it may affect their financial situation, including decisions about buying housing.  I am 58 and not well connected with many young people.  

Anyone so inclined, please pick one (by number):

1) It's a huge mess, it will definitely affect my financial situation gravely, including housing purchase decisions.

2) It's a mess, but I will make it through, even if it's more of a problem than it was for my parents, say...

3) No, it does not matter much to me at all, all is OK...

(Obviously non-scientific, but I am curious to see how this affects responding young ZH members)

Tue, 08/05/2014 - 21:22 | 5052042 Erudite Redneck
Erudite Redneck's picture

I guess they are saying to buy a house first then go back to school and load up on student loan debt because we know the college underwriters don't care how much debt you have.

Tue, 08/05/2014 - 21:41 | 5052124 NoDebt
NoDebt's picture

That's not a half-bad idea, if you have income.

Tue, 08/05/2014 - 21:53 | 5052156 Save_America1st
Save_America1st's picture

it all sounds like perfect implementation of the Cloward-Piven strategy to me.

Wait until they start giving homes away to the millions of illegal invaders (sorry...undocumented Democrats).  Or giving them big time tax "credits", etc., along with their new government subsidised channel stuffed, recalled, GM vehicles.

Instant American middle-class livin' for the illegal invaders!  yee haw, "Folks". 

That's the 'Merikan dream, ain't it? 

***and if you don't think so then you're just a white raaaaaaaycist

~ signed,

Your loving mafia government

Tue, 08/05/2014 - 22:11 | 5052262 Cliff Claven Cheers
Cliff Claven Cheers's picture

What I see is the illegals using fake ssn and getting back like 3, 4 or 5 grand from the feds thru the earned income credit from kids and they use siblings and neices and nephews under 18 yrs of age.  probably have fake ssns for the kids too. I will be honest if I was born poor in mexico I would do everything I could to get mi familia to the estados unidos.


Tue, 08/05/2014 - 22:56 | 5052444 CheapBastard
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Since we know (from Dr Housing Bubble and ZH an dothers) that a majority of house purchases in California were 1) for cash; and 2) by Chinese Mainlanders, we can assume the crackdown by Xi on the corrupt politicans is taking its toll on the RE sector here. Looks like there's gonna ba lot fewer Chinese cash buyers in the future.

I don't think students, even the ones with less debt, are in the mood for a 30 year lead weight around their ankles anymore. Many have wised up to that "American Dream" scam. However, having a massive student loan debt hanging around your neck doesn't help either, esp since the job market for a decent paying job is dismal. 

Tue, 08/05/2014 - 21:49 | 5052150 Dick Buttkiss
Dick Buttkiss's picture

There is going to be a debt jubilee; count on it. Count on the consequences as well, though, as there's no such thing as a free lunch.

Tue, 08/05/2014 - 21:56 | 5052177 Save_America1st
Save_America1st's picture

wishful or misguided thinking...but either way,, there will not be any kind of "debt jubilee".  There will only be massive poverty and tyranny with a total loss of freedom and your God-given human rights.

There will be nothing else for those who are not preparing now by getting out of the system and stacking up. 

Tue, 08/05/2014 - 22:08 | 5052245 seek
seek's picture

There will be some type of forgiveness... but I think it will have two key parts:

1) The lenders will be made whole at taxpayer expense.

2) The recipients of forgiveness will be on the hook to the gov -- either they promise to vote Dem forever, they have to do a certain number of years of community service, work a gov job in a particular area, or some other hook.

Tue, 08/05/2014 - 22:19 | 5052304 Cliff Claven Cheers
Cliff Claven Cheers's picture

Not to mention if any debt is forgiven, the amount forgiven is considered taxable and you will get a 1099c.

Tue, 08/05/2014 - 22:31 | 5052354 DoChenRollingBearing
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Another manifestation of the "Law of Unintended Cosnequences".

Tue, 08/05/2014 - 22:59 | 5052461 Cliff Claven Cheers
Cliff Claven Cheers's picture

A lot of people don't know if you are technically insolvent, have more debt than assets, at the time of debt forgiveness then you do not have to pay taxes on the debt forgiveness, just have to fill out a simple worksheet showing you were insolvent at the time.  I give that free advice all the time it saves some poor people a little money, as the poor broke ones are the ones getting the debt discharged for a reason.

Tue, 08/05/2014 - 23:03 | 5052483 fonzannoon
fonzannoon's picture

it's how we are all going insolvent that concerns me, not so much what happens you arrive at that destination.

Tue, 08/05/2014 - 23:12 | 5052514 Cliff Claven Cheers
Cliff Claven Cheers's picture

Standards of living are definitely going down, kind of sad but that is what happens when you export all your jobs and dont produce anything except bombs/war, debt and financial fuckery tm as a nation.

Tue, 08/05/2014 - 23:23 | 5052551 Majestic12
Majestic12's picture

No, their saying become a Wall St. banker where the new shift from mortgage and derivatives fraud to Fed-backed student loans is a lot easier and cleaner...ducks in a barrel, bitchez...albeit, newly "educated" ducks.

Tue, 08/05/2014 - 21:23 | 5052046 Tijuana Donkey Show
Tijuana Donkey Show's picture

My expereince with younger people (I'm 37) is that they just have a large amount of debt ands its just part of reality. Add in come CC bills from college, and they are maxed out already. They worry about shorter term items instead of buying a house.

Tue, 08/05/2014 - 21:42 | 5052130 Cliff Claven Cheers
Cliff Claven Cheers's picture

As a tax collector I can tell you 90% of people out there have little or no savings.  It sucks getting those bank levies back with a message that says "no funds".

Tue, 08/05/2014 - 22:41 | 5052388 Yes_Questions
Yes_Questions's picture



actually as a tax collector, you have no idea what people have as "savings".


I lend very little to banks, everything else is burried in Tyler Durden's, waterfront with deep ocean access, back yard.




Tue, 08/05/2014 - 22:53 | 5052437 Cliff Claven Cheers
Cliff Claven Cheers's picture

Well I know a very small percentage of citizens actually own any precious metals.  But I hear what you are saying, you can hide cash.  But know this tax collectors and banks hate cash.  The gov hates under the counter stuff and the banks hate not getting fees like they do with every ccard transaction.  A while back banks declared war on cash in Italy becuase Italians used ccards about 50% less than the rest of Europe which meant less fees earned.  Most people love ccards, I think usage is around 70%, the gov does not need to even outlaw cash the peeps are doing it themselves.

Tue, 08/05/2014 - 23:25 | 5052557 Yes_Questions
Yes_Questions's picture



well, the dollars are not belong to us, but to those who've claimed the right to print and reap the vig.

its revelation like that that help me cut the "death and taxes" certainties down by half, for now.


and to zero, in a long enough timeline.




Tue, 08/05/2014 - 21:22 | 5052047 Da Yooper
Da Yooper's picture

Wellllllll we all know the bankers made out fine on the student loan scam

the over priced collages & the faculty  of same made out  nicely as well


BUT our children have the ball & chain of a lifetime of debt


the new form of indentured  servitude


Thank a banker for that

Tue, 08/05/2014 - 21:58 | 5052182 Save_America1st
Save_America1st's picture

misspelling "colleges" there was on purpose, right?  ;-) hahaha

Tue, 08/05/2014 - 22:37 | 5052376 Da Yooper
Da Yooper's picture

I was wondering if any one would get it


+1 for youuuuuuuuuuu  SA

Tue, 08/05/2014 - 21:27 | 5052059 TungstenBars
TungstenBars's picture

Answer: (2)


Age: mid 20's 

Double Bachelor paid off

Pursing MSc in a few and will need some debt. 


Q is hard to really analyze young ppl with as there are so many variables to consider (such as what type of degree, work ethic, financial background, connections etc. )

Tue, 08/05/2014 - 21:30 | 5052084 DoChenRollingBearing
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Of course, thank you.  I'm am curious to get responses, as I do not know, uh, how macro this problem is.

Tue, 08/05/2014 - 21:38 | 5052111 fonzannoon
fonzannoon's picture

Dochen I spoke to a 25 year old today whose Dad paid for his schooling. He then declared the job market dead after 3 weeks and threw away his degree and joined daddys business (that I consult with). I went out for lunch with them today and jr ordered a chicken sandwich and daddy made him order something else because mommy was making chicken for dinner. We reviewed a clients finances after lunch and after the meeting 25yr old college grad asked me what social security was. I explained it and he asked me if all the social security money was held in one bank account and paid from that. I said "well basically yes". He then asked if we could manage the social security fund. I told him to write a letter to the treasury secretary offering to do so. Maybe we can undercut the current asset manager by a few bps to get the account. I will let you know if we get the account. But that pretty accurately describes most young kids around here.

Tue, 08/05/2014 - 21:43 | 5052139 NoDebt
NoDebt's picture

I don't care who you are, that's pretty damned funny right there.


Tue, 08/05/2014 - 22:03 | 5052224 fonzannoon
fonzannoon's picture

You know how it is. i want the account but i am not going to sell myself short. normally my min is 1% but i'd go to 85bps because i figure i could make it up in volume.

Tue, 08/05/2014 - 22:26 | 5052334 DoChenRollingBearing
DoChenRollingBearing's picture

Hey, maybe you actually can con Jack Lew & Co. into it.  Call!  It's worth a shot!

Wed, 08/06/2014 - 01:01 | 5052783 Burnbright
Burnbright's picture

Well Dochen,


I would be in camp #1. It is different when you have kids, and when both you and your spouse have a crap ton of debt and don't make what we should be making. 


Having actually have to come to terms with paying though how ever we have learned to live very frugally but I fear we will have to live this way for about a decade if our incomes don't increase. The only silver lining we have is that by the time my son and daughter goes to school ~3 years, my loans will be paid off in full so we will feel rich after not spending 1600 a month on day care and another 800 on my loans. But we will still have hers to deal with although they will be knocked down considerably. 

Wed, 08/06/2014 - 08:12 | 5053177 disabledvet
disabledvet's picture


Tue, 08/05/2014 - 22:36 | 5052372 NoDebt
NoDebt's picture

I know, I know.  Please stop.  I've had a little to drink tonight and I don't want to wet myself again.

I gotta get some sleep.  Have a good night, you "bankster asshole."

Tue, 08/05/2014 - 21:48 | 5052146 Escrava Isaura
Escrava Isaura's picture


I was in the impression that Social Security was to pay for the Vietnam War.

Tue, 08/05/2014 - 23:48 | 5052475 tickhound
tickhound's picture

Not sure that during the '30's the Vietnam war was anticipated... But a SUSTAINABLE war was sure on the horizon.

But to the ridiculous point that is this article... AS IF, college debt has ruined a so called "housing recovery." As if a "recovery" to unaffordable ridiculous prices was even required in the first place. But assuming that is the goal...

There are SO MANY ingredients to prohibit "recovery" towards a $300k one bedroom apt.

1. Automation of jobs
2. Automation has made jobs more competitive
3. Temporary "cheaper" human labor (outsourcing) until automation makes THAT cost inefficient.
4. Oversupply
5. It's a PONZI scheme like the money system itself. Last one holding the house...

And whether a college kid comes out of brick and mortar debt free or not is irrelevant. He can barely compete now, and time along with technological advancement only emerges... No matter how long we suppress it as something "not for your consumption."

I know pilots making $250 k annually who are already obsolete by way of drone. Truckers, cab drivers, the drive thru window, to airline kiosks replacing humans.

The fact that these pimps of "entrepreneur-ship" are selling you on an idea of 20th century days gone by, is actually part of the problem.

LMMFAO... As IF, bank competition for student loans will somehow influence a return of home ownership "affluence" is a bridge being sold to the dweebs living off of old boomergoon innuendo about "sweat of the brow" nonsense.

Our problems are systemic. Not symptomatic. Boomergoons, make way for the rest of us who aren't religiously glued to a system that assumes you can compete against a computer that doesn't drive an SUV to work and never calls in sick and never bitches about FAIRNESS and doesn't give a fuck when I tag your girlfriend and doesn't need two weeks paid vacation to recover from the trauma. Most boomergoons running the country don't text, so how the fuck are they capable of comprehending Orwell?

Forget the false choices we have in our elected leaders. We have false choices in everything. E: Everything e:

Wed, 08/06/2014 - 00:48 | 5052752 CheapBastard
CheapBastard's picture

My neighbor's son mastered in some aspect of computer science in Austin and said the job market there is bleak due ot: 1) massive oversuply (as you said) not only of Merican grads but tons of Indians brought in by the tech cmpanies who pay them 50-70% of what they pay a Merikan; and 2)the economic slowdown which is finally taking its toll on the tech industry (that already cut over 48k jobs first half of 2014 not including MSFT 18k firings...ooops, excuse me, "layoffs").


The kid is bright so he is looking overseas himself and says HK looks promising. I asked him if he had considered buying a house and he looked at me like I was crazy and groaned, "NFW!"


It's a very challenging world out there for kids and any of them with common sense is not thinking about getting into 30 years of debt and being locked down in a box in one city.

Wed, 08/06/2014 - 02:11 | 5052856 tickhound
tickhound's picture

30 years ago a masters in computer science got you fluency in MsDos, COBOL, and pascal. 20 years later you were in sales for WorldCom. The timing of retirement is as impeccable as is the idea that Dow 1k to 17k type appreciation is there for every generation if they just work hard enough.

"Google last 24 hours" is more current than any college curriculum.

And unintended consequences abound... As jobs become scarce the need for higher education (brick and mortar) becomes self-feeding to the point of marketing frenzy. The system is fueled by this.

The job market is changing too fast for colleges to adequately prepare young adults, let alone justify the tuition. But it's institutionalized to the point where it's become a pay to play tax. It's a fee for a license. And at a time when information is more free and abundant than any other time in human history.

Tue, 08/05/2014 - 22:09 | 5052253 Milton Waddams
Milton Waddams's picture

I know a couple of younger kids using their income to invest in their 401K or IRA instead of paying down either credit card debt or student loans. I try to advise them to do otherwise but they are insistent. My typical response is: learn math.

Wed, 08/06/2014 - 06:36 | 5053038 skipjack
skipjack's picture

Except that retirement accounts are protected in bankruptcy. OK,it is possible but not likely to BK out of student loans, but I say, load up on CC debt, pay off the student loans from the CCs, then BK on the bank CCs. It's only fair.

Tue, 08/05/2014 - 21:28 | 5052071 Escrava Isaura
Escrava Isaura's picture

Great that you asked these questions, DoChen.

Not sure if Zero Hedge attracts this young crowd. Anyway, remember reading some website by young people, and it was pretty bad, accordingly to them.

I think I might have it saved somewhere. If I find, I will link this thread there.

Tue, 08/05/2014 - 21:49 | 5052151 Killtruck
Killtruck's picture

Perhaps not as "young" as you are looking for, but being late 20's, I will answer with #3.

It doesn't matter much to me ONLY because I worked the entire time I was in college - part time jobs with a full course load for four years. I also went to one of the cheaper private schools, trying to minimize the cost but still retaining the private school mentality. Graduated without debt, found a good job in my field, and rented an apartment for a few years.

Not rich today by any means, but I'm very happy. Well, I WAS happy - before my boating accident, I had a respectable stack of hard assets. Now those are all gone. Terrible loss.

Tue, 08/05/2014 - 22:01 | 5052209 Postal
Postal's picture

The Force is strong with this one...

Tue, 08/05/2014 - 22:13 | 5052273 seek
seek's picture

Eldest daughter is in #3 camp -- she got wind of how student loans were fucking over kids in her senior year of high school, so opted to go with CC and self-fund tuition instead. I was surprised when she called me up after a high school personal finance class to confirm student loan debt wasn't dischargable in bankruptcy -- that was the big eye opener for her, and she immediately recognized student loan = slavery.

As word gets out about the scam that student loans are, I expect to see more of this, and really desperate recrutiing campaigns by the schools before it all implodes.

Tue, 08/05/2014 - 22:23 | 5052318 Wait What
Wait What's picture

most 20-somethings I know are just waiting for their baby-boomer mom and dad to die so they can have their houses.

no joke. this actually came up in conversation recently.

fortunately I've fallen into the 3) category, so I just listen to my friends' problems, take a sip of my 18 yr old scotch, nod empathetically, and turn my head solemnly toward the city and ocean sunset that lie below.

there are between 50-60 million americans who in 10 yrs or so will have greater need for caskets than houses, so who gets all that property? a lot of debt loaded millenials are betting it will be them.

Tue, 08/05/2014 - 23:35 | 5052589 Majestic12
Majestic12's picture

It might as well be propery on the moon (my favorite vacation spot) because values will soon be falling off the vast crater cliff of the shrinking population chohort demand, with shrinking earning capacity, shrinking problem solving skills, and shrinking tolerance for each other...[sip] ahh, you are definitley right about the 18 year old single malt....about those caskets....I forecast a just a "few" more than 50-60 million....

Wed, 08/06/2014 - 09:01 | 5053346 Lostinfortwalton
Lostinfortwalton's picture

Try making nursing home payments for a few years...."and, it's gone!"

Wed, 08/06/2014 - 00:38 | 5052721 Government need...
Government needs you to pay taxes's picture

The logical conclusion is to redefine your desired adult lifestyle to emphasize mobility/freedom over 'lotsa depreciating/taxable material possessions'.  The current paradigm is unsustainable, and there are huge changes coming in the areas of healthcare, education, and (hopefully) national government.  I would advise the young men and women to continue pursuing their education, which should include a useful foreign language (spoken by >1 billion worldwide) and a trade (welding, plumbing, electrician work, mechanic, etc).  Dont worry too much about nominal student debt levels.  Hyperinflation (or something worse like a world war) is coming, and it will be a life-changer/ender for everyone.  In other words, keep your pecker hard and your powder dry, cuz the worm will turn.

Wed, 08/06/2014 - 00:32 | 5052724 oneshotklink
oneshotklink's picture

(1) and I'm making well over 100k per year. Obamacare eliminated nongovernment loan consolidation, so I am paying about 8% apr (which accrues daily) to the fed govt instead of the 4.5% I was paying to sallie Mae on my negligible undergrad loans. Last time I calculated, I was paying over $60 PER DAY in interest alone on my and my wife's law school loans. All after tax dollars. Totally crippling.

P.s. The law changed while I was in school so the amount I expected to be paying after graduation about doubled thanks to that little bitch in the White House. I feel for little Barry though, as he never had a dad. And It shows.

Wed, 08/06/2014 - 00:33 | 5052725 oneshotklink
oneshotklink's picture

(1) and I'm making well over 100k per year. Obamacare eliminated nongovernment loan consolidation, so I am paying about 8% apr (which accrues daily) to the fed govt instead of the 4.5% I was paying to sallie Mae on my negligible undergrad loans. Last time I calculated, I was paying over $60 PER DAY in interest alone on my and my wife's law school loans. All after tax dollars. Totally crippling.

P.s. The law changed while I was in school so the amount I expected to be paying after graduation about doubled thanks to that little bitch in the White House. I feel for little Barry though, as he never had a dad. And It shows.

Wed, 08/06/2014 - 02:15 | 5052863 Canoe Driver
Canoe Driver's picture

Unless you have a secondary profession, as in you are an engineer, or a physician, then you would have to be quite a maroon to go to law school in the first place. This has been the case for well over 20 years.

Wed, 08/06/2014 - 00:33 | 5052726 oneshotklink
oneshotklink's picture

(1) and I'm making well over 100k per year. Obamacare eliminated nongovernment loan consolidation, so I am paying about 8% apr (which accrues daily) to the fed govt instead of the 4.5% I was paying to sallie Mae on my negligible undergrad loans. Last time I calculated, I was paying over $60 PER DAY in interest alone on my and my wife's law school loans. All after tax dollars. Totally crippling.

P.s. The law changed while I was in school so the amount I expected to be paying after graduation about doubled thanks to that little bitch in the White House. I feel for little Barry though, as he never had a dad. And It shows.

Wed, 08/06/2014 - 02:27 | 5052878 Canoe Driver
Canoe Driver's picture

Between the student loan debacle and the health care disaster, the situation is worse than you account for in your three choices, DoChen. This is the wholesale abandonment of the young, which has been adjudged necessary by TPTB in nearly all western countries. And these are the same people who pretend to regard childbirth as sacred. There are no more house purchase decisions by the young, there are house purchase attempts, some of which stick for a while. Equity is never built, though it may be inherited, which is why the upper classes think they are immune.


Two recent law graduates walking in the Rue Royale several days ago asked me to open a bottle of Maker's Mark for them. These girls were drinking on the street, from a paper bag. I tore off that pretentious wax seal, opened the bottle, took a swig, passed it to the blonde, and told them I was a lawyer. They asked me about employment prospects, and I told them the truth. Then I added, "Now, if you were topless dancers, and lawyers and the same time, that would be something."

Wed, 08/06/2014 - 03:36 | 5052914 ebworthen
ebworthen's picture

My suggestions:


  1. Eternal forebearance.
  2. Debt jubilee.
  3. U.S. Default.
  4. All three of the above.

If AIG, Bear Stearns, Coutrywide, GM, Citi, etc. - don't have to pay their bills - why should students?

Wed, 08/06/2014 - 11:33 | 5054164 Ricardo Pobre
Ricardo Pobre's picture


I'm carrying some student loan debt, but decided to purchase a house a couple years ago.  Shorting the USD via a 30-year fixed rate 3.75% mortgage seemed like a good bet at the time.   

Mon, 08/11/2014 - 22:25 | 5080250 Mermaid Seamstress
Mermaid Seamstress's picture

I'm a 2.   I went to Midwest private university from 99-2004 and racked up a lot of student loan debt. It took me 6 months to find a full time job which was right as the first bill came due. I had about 47K in loans. Thru consolidation and kicking the loan term out to 30 years I was able to survive my first several years. I'm 35 now and I have 20 more years left to pay. I have the amount down to 32K, and had to suspend payments a few times.  In 2008 I saw my opportunity to buy a house. My mortgage is modestly higher than rent. The utilities kill me. Home repairs are racking up. I ignore it for now. I've had a couple roommates but nothing constant. I have mixed feelings, and would feel nothing if my home burned to the ground. I hate the debt I carry. I'm getting married in 6 months and I can't afford anymore debt. Neither can my boyfriend. Soon we have to make the decision whether or not to have kids. As a white, educated couple you'd think this would be a no brainer. The reality of our debt, unstable job market and stress...I'll be lucky to have a retarded down's syndrome baby. Sometimes on my bus ride into work I dream of quitting my job, going on Section 8, and living off SNAP benefits. The welfare loving illegals I know have it better than I do. Low stress too. I continue on with my life, but I deeply believe it's for nothing. A zero sum game. This is the best America can do.

Tue, 08/05/2014 - 21:10 | 5051959 Escrava Isaura
Escrava Isaura's picture

Make student loans transferable to credit card. Then, default on it!

Tue, 08/05/2014 - 21:16 | 5052009 DoChenRollingBearing
DoChenRollingBearing's picture

I'm not sure if that would be legal, you cannot easily escape student loan debt by bankruptcy, for example.


chumbawamba may have had it right years ago:

Max out your credit card buying gold, then default!

Tue, 08/05/2014 - 21:19 | 5052025 Escrava Isaura
Escrava Isaura's picture

Men, this chumbawamba is good.

Tue, 08/05/2014 - 21:31 | 5052038 DoChenRollingBearing
DoChenRollingBearing's picture

Introduce yourself to him, then.  He's often in ZH Chat (bottom right), especially in the evening.

He's an interesting guy!  <--- That's a tease & a warning, LOL...

Tue, 08/05/2014 - 21:32 | 5052091 Escrava Isaura
Escrava Isaura's picture

I am chumbawamba

I know the character. Saved couple great posts by him.

Tue, 08/05/2014 - 21:32 | 5052093 Cliff Claven Cheers
Cliff Claven Cheers's picture

Only option is to get a degree and emigrate to another country.  Apply for political assylum under the fact that US has too much debt, odious debt a form of involuntary slavery.

Tue, 08/05/2014 - 21:34 | 5052103 DoChenRollingBearing
DoChenRollingBearing's picture

Only if you leave with a LARGE amount of money that appears clean (say over $100,000).  But, Peru ain't buying that. *



* Unless it's more like $250,000...

Tue, 08/05/2014 - 21:39 | 5052116 Cliff Claven Cheers
Cliff Claven Cheers's picture

Actually now that I think about it, if the IRS has enough authority to break swiss banking privacy, established for hundreds of years, there probably is no where in the world to hide from Uncle Sam.

Tue, 08/05/2014 - 22:00 | 5052197 Escrava Isaura
Escrava Isaura's picture


So, what's your view on gold purchased with credit card.... say, if the government double the tax on gold profits?

Tue, 08/05/2014 - 22:05 | 5052234 Cliff Claven Cheers
Cliff Claven Cheers's picture

They don't train me on tax rules just how to extract money from people and businesses.

Tue, 08/05/2014 - 22:23 | 5052322 fonzannoon
fonzannoon's picture

Cliff I wish you stuck with being a mailman.

Tue, 08/05/2014 - 22:28 | 5052341 Cliff Claven Cheers
Cliff Claven Cheers's picture

Its still gov work.

Tue, 08/05/2014 - 22:30 | 5052349 fonzannoon
fonzannoon's picture

yes I realize that. But even within that framework there seems to be some lesser evils

Tue, 08/05/2014 - 22:35 | 5052365 Cliff Claven Cheers
Cliff Claven Cheers's picture

I hear you some tax collectors are real dicks.  But think about it like this, you pay your taxes and I pay mine so why should anyone get away with not paying theirs.   BTW I am pretty easy going I set up a lot of pay plans and I refund 90% of penalty requests, I am kind of a softie.

Tue, 08/05/2014 - 22:37 | 5052379 fonzannoon
fonzannoon's picture

I hear you, I just hope you go after that teacher tutoring for cash during the summer as much as you go after that biz man. Or better yet somehow get the fsa to ante in.

Tue, 08/05/2014 - 23:03 | 5052418 Cliff Claven Cheers
Cliff Claven Cheers's picture

That cash stuff is tough.  It is amazing the data sharing that goes on.  My state gets info from customs on imports and its reported value then we send a sales tax bill if the purchase does not get reported to us.  I had a guy buy some stuff for around 5k from Taiwan and he got a nice surprise sales tax bill from us.  Also we can get access to all ccard purchases from any merchant in our state to verify purchases, etc.   Also the old trick of purchasing a used car and getting the seller to write a bill of sale for less than the purchase price is coming to an end.  We now are auditing them and if the fair market value is more than the reported sales price we send them a bill for the difference. 

Wed, 08/06/2014 - 01:15 | 5052798 Central Bankster
Central Bankster's picture

Well that is bullshit and you should be ashamed of yourself for doing that.  The value of anything is what someone pays for it, not what someone says its worth.  This is how we get these rediculous property taxes on home values that only appreciate because some bureaucrat says so.  Just because somebody *might* have lied about their taxes, doesn't give you the right to fuck them over.  Especially, considering the fact that people who take "below market" prices probably do it because they are having financial problems and/or their car is a lemon.  The onus should be on you to prove it.  If you can't, the law needs to be changed or the tax eliminated, period.

Wed, 08/06/2014 - 22:04 | 5053161 Cliff Claven Cheers
Cliff Claven Cheers's picture

That is rich coming from a Central Banker.  It is what it is..  Vote for some hope and change.  Its like I tell all the complainers, contact your state legislator and attend the rule making hearings if you want to change things.  Most people don't care until it impacts them financially.


I should add thay anyone can appeal an audit and verify if a vehicle, etc is worth less.  They just have to prove it.  Believe it or not a lot of people ask to have a lower bill of sale to avoid sales taxes.

Tue, 08/05/2014 - 22:28 | 5052346 Escrava Isaura
Escrava Isaura's picture

I meant, collect taxes on the gold profits, say when the gold goes to $5/$10 thousand dollars an ounce, because US defaulted on its debt.

Good businesses to go after, I would think.

Tue, 08/05/2014 - 21:15 | 5052010 logicalman
logicalman's picture

My son worked his ass off to pay for chef's college before he signed up.

He's now a qualified chef and owns some Au & Ag

He has no debt.

He's 20


Tue, 08/05/2014 - 21:27 | 5052062 DoChenRollingBearing
DoChenRollingBearing's picture

Our daughter's bf worked as an engineer, paid off HIS student debt (big debt!) in something like 2 and 1/2 years.  Now he feeds at the trough at .gov with a nice job...

Which is OK w/ me!  :)

Tue, 08/05/2014 - 21:27 | 5052063 Uber Vandal
Uber Vandal's picture

My neighbor wanted to buy a different home, has his current home paid for, has ample down payment, and has a steady income.

Unfortunately, since he co-signed for his three children's student loans, the banks would not give him the loan for a new home, for they said that put this debt to equity over the limit.

Note: None of his children have defaulted, all are current, and have jobs (for now), but the banks said they could (default).


Slowly, he is starting to understand my view on things...........



Tue, 08/05/2014 - 22:14 | 5052277 tempo
tempo's picture

69 years ago 1st atomic bomb dropped (8/6/45) and established US as the world's super power which then established the $ as the world's energy reserve currency. The $ would never the world's currency w/o dropping the bomb and the US easy life and entitlement mentality never developed. US $ will just be one of many currencies and our life of ending entitlement will be over in a few years.

Thu, 08/07/2014 - 03:41 | 5057784 Tapeworm
Tapeworm's picture


 My wife had essentially nothing when I met her. What worked out in the past thirty years is that she carried no debt and I am a cheap SOB that has borrowed only four times. I too had no debt so we were somewhat similar to many of those in the early 1980's. There was a decent sized cohort that had few assetts but no debt and that payed off the house early. I did it on the profits from Harmony gold mines (HGMCY) and was clear after twelve years.I did not understand my wife's very subdued reaction to the news that we had no bank debt any more.

 Many of our age cohort of 1948-1958 still have crushing debt levels from using the house as the ATM to go for unaffordable vacations and toys if they had been only available by cash payment.

 The happiness of married couples is in inverse proportion to their debt levels going in. That's my theory and I am sticking with it even though I do not have any degree. This POV is akin to a similar measure of happiness based upon physical features.

Tue, 08/05/2014 - 21:05 | 5051954 Escrava Isaura
Escrava Isaura's picture

That's right. Forgot that $95000 option!


Tue, 08/05/2014 - 21:05 | 5051961 Bill of Rights
Bill of Rights's picture

Joe Biden The " Nation " of Africa,..This administration is a Global embarrassment.



Tue, 08/05/2014 - 21:09 | 5051977 Escrava Isaura
Escrava Isaura's picture

Ohh Boy! You sure have short memory.

Tue, 08/05/2014 - 21:12 | 5051996 Bill of Rights
Bill of Rights's picture

I blame Grover Cleveland

Tue, 08/05/2014 - 21:16 | 5052014 Escrava Isaura
Escrava Isaura's picture


Tue, 08/05/2014 - 21:21 | 5052039 Grande Tetons
Grande Tetons's picture

I will leave the rest to Bill of Rights. 

Tue, 08/05/2014 - 21:26 | 5052057 fonzannoon
fonzannoon's picture

I guess we pissed off the almighty eh?

Tue, 08/05/2014 - 21:30 | 5052067 Grande Tetons
Grande Tetons's picture

That was cool. Kinda like watching the dog eat your homework in real time.

Tue, 08/05/2014 - 21:32 | 5052095 DoChenRollingBearing
DoChenRollingBearing's picture

Well done, fonz!  Now I want to look at the other threads too!  Ha ha ha ha ha!

Tue, 08/05/2014 - 21:40 | 5052118 Escrava Isaura
Escrava Isaura's picture

DoChen, fonz? I don't get it.

Tue, 08/05/2014 - 22:28 | 5052313 DoChenRollingBearing
DoChenRollingBearing's picture

Tylers killed off the bot saying how much his sister's *whatever* was making.  fonz must have convinced the Tylers that the time had come...

When Tyler boots someone off a thread, all remarks "under" it disappear as well.  That's what fonz was referring to.

Tue, 08/05/2014 - 22:31 | 5052356 Escrava Isaura
Escrava Isaura's picture

Got it! Thanks.

Tue, 08/05/2014 - 21:32 | 5052088 Dr. Engali
Dr. Engali's picture

Wtf does Bush have to do with Bill of rights statement? Are you so butt hurt that you just want it to be on the record that Bush was a national embarrassment? Well guess what? You won't get any argument on this site. Why don't you try posting something of relevance? Just once... You may like it.

Tue, 08/05/2014 - 21:38 | 5052112 Escrava Isaura
Escrava Isaura's picture

Dr. Engali,

What's going on here?

Tue, 08/05/2014 - 21:53 | 5052159 NoDebt
NoDebt's picture

Stick around.  Some of this stuff you have to just put in the time and learn the references.  I'm sure somebody will jump in and state it plain for you, but you won't appreciate it as much as figuring it out on your own.

Tue, 08/05/2014 - 21:54 | 5052173 Escrava Isaura
Escrava Isaura's picture

Thanks for the heads up.

Now, I am gonna make me another drink. Don’t want to be thirsty while fighting.

Tue, 08/05/2014 - 22:02 | 5052210 Dr. Engali
Dr. Engali's picture

What's going on is that you decide to insult somebody because they make a true statement like "joe Biden is a national embarrassment" . Yes Bush was an embarrassment, but that doesn't make Joe Biden any less so. But what really rubs me the wrong way is that you insult people just for the sake of insulting them while never adding anything substantive to the discussion.

Tue, 08/05/2014 - 22:07 | 5052242 fonzannoon
fonzannoon's picture

sounds like a real headbanger

Tue, 08/05/2014 - 22:12 | 5052271 Dr. Engali
Dr. Engali's picture

I think he has a thing for you that's why he's so head bangingly (yeah I made that up) frustrated.

Tue, 08/05/2014 - 22:24 | 5052319 Escrava Isaura
Escrava Isaura's picture

Frustrated? You get do better than that, Buddy!

Tue, 08/05/2014 - 22:28 | 5052330 fonzannoon
fonzannoon's picture

I honestly am not following this thread well but since you are all about bush and I just locked in your sentence, enjoy

Tue, 08/05/2014 - 22:35 | 5052369 Escrava Isaura
Escrava Isaura's picture

Fonz, in your name, or thread, if you would prefer, I made the comment that you should had told that 25 years old that Social security was used to pay for Vietnam war.

About Bush, I was commenting on can’t remember his name now.

Tue, 08/05/2014 - 22:38 | 5052382 fonzannoon
fonzannoon's picture

I'm not sure what's going on right now but I am going to sleep. Lata

Tue, 08/05/2014 - 22:38 | 5052378 Dr. Engali
Dr. Engali's picture

Not every comment is about you.

Tue, 08/05/2014 - 22:21 | 5052306 Escrava Isaura
Escrava Isaura's picture

Thanks for the clarification. You said that I insult people without adding anything substantive.

Sir, with all the respect, I do not insult people. However, I do have some issues with people that are misrepresenting facts, that doesn’t know US history, and that are distorting the meaning of some nouns (words). I don’t take these issues lightly.

Now, about substantive issues. Glad that you asked.

We’re talking about education (student loans).

Dr. Engali, let me introduce you to Professor Patzek:

Take, for example, President George W. Bush, a Yale and Harvard graduate. His VP, Dick Chaney, was another failed Yale student and draft dodger, while his Secretary of Defense, Donald Rumsfeld, was a political scientist from Princeton.  Yet another prescient guru in this team was the Treasury Secretary, Henry Paulson, with a B.A. in English from Dartmouth College and MBA from Harvard, just like President Bush.  Paulson's most quotable parting words were: "Who could know that the financial markets would collapse?"

In eight memorable years, those geniuses -  not one with an advanced degree in anything I would consider to be rigorous education - raked up 30% of all U.S. national debt and did more damage to the U.S. than all of our enemies combined over the last century.  Their collective actions are quite an achievement for any Ivy School-educated team. Now, were their academic teachers researchers or lecturers?  Or does it matter?

Tue, 08/05/2014 - 22:32 | 5052364 IridiumRebel
IridiumRebel's picture

What's relevant is understanding that these chosen "leaders" are supposed to serve their masters at our expense. They are not dumb. They are all actually quite adept at making people think they are dumb to further the invisible hand. Realize that and you'll be getting somewhere.

Tue, 08/05/2014 - 22:38 | 5052380 Escrava Isaura
Escrava Isaura's picture

I don't agree in total with your statement. But, it is a good statement about politicians.

Tue, 08/05/2014 - 22:53 | 5052435 IridiumRebel
IridiumRebel's picture

There are varying degrees, but all the men you mention and the higher ups like the current admin are there to serve a purpose. That's what I learned in my Poli Sci degree.

Tue, 08/05/2014 - 22:35 | 5052370 Dr. Engali
Dr. Engali's picture

I'm not interested in what's transpired in the past, Bush is long gone and he can't do any more damage. The current occupant of the White House can. Just for the record:

Tue, 08/05/2014 - 22:44 | 5052405 Escrava Isaura
Escrava Isaura's picture

Neither am I. Just don't like the hypocrisy.

Wed, 08/06/2014 - 01:03 | 5052789 PrecipiceWatching
PrecipiceWatching's picture

Then quit trying to equate Bush with all his flaws considered, to the current RaceMarxist POS in the Oval office.

Bush was a Centrist.  Obama is a radical Leftist actively engaged in the destruction of the United States.


But then, this is probably a PLUS in your book.

Tue, 08/05/2014 - 22:50 | 5052423 eclectic syncretist
eclectic syncretist's picture

The next administration might be even worse than Obomber and Bushwacker together.  Fucking sad.

Tue, 08/05/2014 - 21:14 | 5052006 MedTechEntrepreneur
MedTechEntrepreneur's picture

Now add to that-- OBAMACARE  <---Nail in the coffin.

Obamacare is an opportunity cost  poster child. Count that cost in lost savings, investing, purchasing power.....

Tue, 08/05/2014 - 21:15 | 5052012 logicalman
logicalman's picture

Whether you like Obamacare or not, you WILL pay for it.


Tue, 08/05/2014 - 21:19 | 5052021 Joebloinvestor
Joebloinvestor's picture

Yeah that's the ticket.

Move them from unpayable student loans to home foreclosure.

Might as well throw a car they can't afford in the mix to. 

Tue, 08/05/2014 - 21:24 | 5052051 Bemused Observer
Bemused Observer's picture

That's why the students should max out their credit on beer, babes, and Spring Break. Let the repo man try and chain THAT to the back of his truck.

Tue, 08/05/2014 - 21:41 | 5052125 Joebloinvestor
Joebloinvestor's picture

Credit card debt cannot be discharged in BK.

Tue, 08/05/2014 - 22:08 | 5052246 Save_America1st
Save_America1st's picture

are you sure?

this is just one of many I found just now regarding that subject.


Maybe you were thinking of student loans?  Cuz those suckers definitely can't be BK'd...ever.

Tue, 08/05/2014 - 22:17 | 5052292 Bemused Observer
Bemused Observer's picture

I don't might want to go and check that again.

Tue, 08/05/2014 - 21:20 | 5052031 Bemused Observer
Bemused Observer's picture

"Loan Depot"?

They shouldn't be permitted to give themselves such cutesy, friendly names. Personally, I think all loan officers should be required to wear long black robes and carry scythes. It should be a uniform, like a judges robes, so no one forgets how serious the decision is.

Tue, 08/05/2014 - 21:25 | 5052052 brown_hornet
brown_hornet's picture

Higher salaries for professors, lower salaries for carpenters.

Tue, 08/05/2014 - 21:25 | 5052058 Dre4dwolf
Dre4dwolf's picture

The solution is clearly to stop building chairs and let the professors stand.

Tue, 08/05/2014 - 21:29 | 5052077 i_call_you_my_base
i_call_you_my_base's picture

That money isn't going to professors, it's going to administrators and facility development.

Tue, 08/05/2014 - 22:18 | 5052056 Dr. Engali
Dr. Engali's picture

It's kind of hard to maintain two mortgages (one of them being a student loan) when you're a part time shelf stocker with a college degree.

Tue, 08/05/2014 - 21:27 | 5052065 MASTER OF UNIVERSE

Subprime Student Loans is their bread and butter. Banksters can't survive without bread and butter. If they stop selling subprime loans

they will have to bug out of the USA as soon as they do.

Tue, 08/05/2014 - 21:30 | 5052086 i_call_you_my_base
i_call_you_my_base's picture

That's part of the problem. But overall wages do not support current prices across demographics.

Tue, 08/05/2014 - 22:03 | 5052214 Yes_Questions
Yes_Questions's picture



so, what does the jump from 3-5 hundred really mean here?



Fuck it, its time Student Loan Debt lose it's magic protection from Bankruptcy discharge.

Tue, 08/05/2014 - 22:08 | 5052252 Postal
Postal's picture

...until mortgage investors and lenders come up with either more flexible underwriting tools or new loan products (and that never ends well).

Why not? It did last time.


Tue, 08/05/2014 - 22:25 | 5052331 Salsipuedes
Salsipuedes's picture

Of course "they had no idea what  they signed up for and what this meant." They were too busy getting gussied up for the prom or puking in somebody's backyard.

Tue, 08/05/2014 - 22:38 | 5052383 q99x2
q99x2's picture

I've got a solution. Come to my "How to purchase your first home with your student loan seminar." on weekends starting in September in Venice, CA. Seats are limited so hurry and purchase tickets today.

Get your Q99X2 certification and find other classmates to team up with. Total course fees a mere $99.99. Who knows you may meet your soul-mate at the same time.

Tue, 08/05/2014 - 22:44 | 5052397 novictim
novictim's picture

"The numbers mirror the concerns of some housing analysts, who say that young adults often don’t realize how signing up for thousands of dollars of student debt could hurt their ability to borrow later. “The continual feedback that I hear from the millennials is, ‘I had no idea what I signed up for and what this meant,” said Mollie Carmichael, a principal at John Burns Real Estate Consulting, at a conference last month."

Bullshit.  Stop.  Halt.

The issue is that great American Jobs have been shipped away or rented out to H1bVisa holders or replaced with CRAP jobs.

The issue is that jobs today don't pay worth a shit - YET - college tuition/room&board costs keep going up like they were created in some parallel universe where even janitor's pay could support a kid going to college.

The kiddos are not to blame.  WE ARE TO BLAME.

Work to return democracy to this country!  Work for Campaign Finance Reform and full disclosure laws..


Tue, 08/05/2014 - 22:58 | 5052441 Salsipuedes
Salsipuedes's picture

May I suggest to you that it TAKES A VILLAGE of idiots to create the sordid mess the U.S. finds itself in. After generations of betrayal, duplicity, avarice and fraud, if  you're over 18 and you still buy into their bullshit, you are to blame. Catch a freighter and see the real world. And take sunscreen dummy!

Tue, 08/05/2014 - 23:31 | 5052572 Postal
Postal's picture

I respectfully disagree: I was 38 (or so) before I became enlightened. At 18 all one cares about is getting laid (for the boys) or money/popularity (for the girls). Young adults are not exactly known for their long-term view, especially with respect to financial consequeneses .

Wed, 08/06/2014 - 00:58 | 5052776 PrecipiceWatching
PrecipiceWatching's picture

Yeah, "see the world", STILL for the most part a major shit hole compared to the current United States. 

 This even after deecades of relentless destruction of America by the criminal Marxist Left.

Tue, 08/05/2014 - 22:44 | 5052406 AdvancingTime
AdvancingTime's picture

A student loan is designed to help students pay for university tuition, books, and living expenses. It seems that many students are borrowing against their future at an almost unimaginable pace, unfortunately the money is often used for things other then education.

Too many young people and others taking student loans "living expenses" go on to include cars, trips, vacations and more. All this has a very dark side that will effect the lives of these borrowers going forward and has the potential to grow to crisis dimensions in the future.

In many ways society is encouraging young people to take on this debt and to hock their futures. This is akin to the, "I will gladly pay you Tuesday for a hamburger today" way of thinking. More on this subject in the article below.

Tue, 08/05/2014 - 23:23 | 5052549 homiegot
homiegot's picture

Common sense is in short supply these days.

Tue, 08/05/2014 - 23:41 | 5052608 IANAE
IANAE's picture

Current student loan fiasco is moar chasing the American Dream...just like subprime mortgage...

Enabled by govt/biz partnership via govt-backed conduit funded loan programs, "Reach for yield" by lenders and "Reach for American Dream" by borrowers conspire to overcome common sense tests of cost-benefit and personal financial risk as the hopeful believe what they are told (sold) will help them realize the American Dream and join the 1% (or 5% or whatever%).

Inevitable implosion follows several years of broad-based levering up against future earnings that never materialize.

Very disappointing to see the cycle repeat again...and again...and again...

Wed, 08/06/2014 - 00:52 | 5052763 PrecipiceWatching
PrecipiceWatching's picture


This is a thieving, market, merit and effort-distorting Marxist mutation of the real American dream.

Tue, 08/05/2014 - 23:54 | 5052644 TrustbutVerify
TrustbutVerify's picture

And just many of those degrees are stuffed with useless classes and PC classes - a waste of that loan dollar. Keep in mind. too, the social promotion in colleges these days, too.  

Wed, 08/06/2014 - 00:21 | 5052697 JoJoJo
JoJoJo's picture

Recent Obama speech "I lowered student loan interest rates so they wont be saddled with debt." Student buckos better saddle up anyway
because Obama has blown out the national debt ceiling by over 7 TRILLION - more than all former presidents combined.

Will someone please start a book "The Man Who Could Not Tell The Truth" which will certainly top Amazon's charts? Except their may not be an Amazon





Wed, 08/06/2014 - 00:20 | 5052698 22winmag
22winmag's picture

Queue the late-night T.V. commercials pimping the unaccrediated shit-and-piss tech schools that promise a lifetime of rainbows and skittle-shitting unicorns to those lucky enough to sign up.

Wed, 08/06/2014 - 00:48 | 5052750 PrecipiceWatching
PrecipiceWatching's picture

And yet often a superior choice to "accredited" hideously overrated and expensive "prestigious" Ivy League colleges, stuffed to the rafters with affirmative action racist shit disturbers and thoroughly unaccomplished Communist no talents.


All living an enormously luxurious life due to US government support of the consummately wasteful and thieving BigEducation criminal enterprise.

Wed, 08/06/2014 - 08:47 | 5053291 Lostinfortwalton
Lostinfortwalton's picture

Actually 10,000 up votes if I could.

Wed, 08/06/2014 - 02:37 | 5052889 kareninca
kareninca's picture

"Simply put, homeownership rates will face pressure until student borrowing slows or until mortgage investors and lenders come up with either more flexible underwriting tools or new loan products (and that never ends well)."

Um, homeownership rates could also rise, if house prices drop.  That's another option.

I look at the prices of houses in SE CT and western RI, and they are still all out of whack vis a vis what a person with a "present day" job could afford.  A "regular" house is 350k.  Well, that might have been okay for the old days of 2005 when people had high salaries.  But salaries these days are low  -  the percentage of the population in CT that can afford a 350k house is shrinking, shrinking, shrinking.  But still the houses sit, and the asking prices only go down a little, and slowly.

Think about it.  Houses were easy to get at 2x median income, at some points in the 20th century.  If they went back to that, they could sell them to anyone with a job, even to people with student loans.  Well, there is that "with a job" thing.

Wed, 08/06/2014 - 05:17 | 5052950 NuYawkFrankie
NuYawkFrankie's picture

There's only so much blood.

Someone better tell Shylock that.

Wed, 08/06/2014 - 06:13 | 5053012 B2u
B2u's picture

I got a BS in Crafts from an Ivy League skool.  I can finger paint, make stuff with glue and popsicle sticks. I can make hats from newspapers, which can also be used for dog training.  I learn't how to glue sequens to clothes (don't wash them cuz the sequins fall off). I can make lots of  baskets and cheap gifts.  Why can't I get a high paying job? I really want to be the CEO of a big company or maybe a politician. 

I have a $100,000 student loan and I kan't pay it until someone gives me an easy job.

Wed, 08/06/2014 - 07:06 | 5053071 Last of the Mid...
Last of the Middle Class's picture

It costs a lot to indoctrinate our youth in left leaning, massively government controlled economy. However, the benefits of government solution for everything, low information nonsense, are huge. This is just a cost society must pay in order to propagate itself comrades. Anyone not on the same page with this thinking might be a terrorist and is surely a racyyyssst.

Wed, 08/06/2014 - 08:12 | 5053176 graspAU
graspAU's picture

The young overwhelmingly can't get careers started after college because of the competition for very few good jobs. The people mid-career are hanging on for dear life if they have a legacy good job (engineering - physical or virtual) hoping they can keep it for another 10-20 years to eek out a retirement that has half the standard of living that the generation before them had with pensions and retirement medical benefits that don't exist any more.

Then there are people in their mid-60's that are in those engineering type positions that are also holding onto them for as long as possible because they see the real job market, and figure they should stay in until they are kicked out because they will never have the option to come back in if they leave, plus soc sec payout goes up something like 8% every year you wait for a certain period of time. 1st time I have ever seen people being closer or in retirement as lucky, meaning its better to be near the end of life then at the start of adult life, as the standard of  living is headed only one way for potentially decades.

Wed, 08/06/2014 - 08:47 | 5053290 ClowardPiven2016
ClowardPiven2016's picture

Driving this problem is out of control tuition costs. I work at a major university and since 2006 tuition has increased 58%. During the same time period, according to the "official" government stats, inflation has been 18%.

Wed, 08/06/2014 - 09:04 | 5053341 graspAU
graspAU's picture

Look deeper/closer for root cause) money supply toward the service bids up prices. If 10 people want the last loaf of bread, and they each have $10,000 in their pocket, the price that last loaf of bread sells for will be a lot more than if they each only had $10 in their pocket. Same thing happens if you play Monopoly and prices have peaked. Go open another monopoly game and put the money from that 2nd game box into the first and prices start to go up again.

The students willing to pay the higher prices and the quantity of money available through the loan system is what pushes costs up. The cost benefit ratio for each individual should be strongly considered. What kids need is a knowledgable parent to guide them in their decision making process or to learn the details themselves. The people that make money on the loans or from the loans have no interest in crashing the party. Schools are in the same position as realtors and builders in housing transactions. Say and do anything to keep the gravy train running until the laws of nature can't let it happen any longer.

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