Student loan debt suppressing home ownership for young adults

[eridani]

http://www.doctorhousingbubble.com/education-of-the-housing-market-student-loan-debt-and-falling-birth-rates-slow-demand-for-the-first-time-buyer-market-sallie-mae-debt/

The crisis in housing seems to be leveling off only in the sense that we have grown accustomed to horrible news regarding the housing market for four years. We have developed coping strategies to combat the crushing reality that home prices continue to ebb lower as more foreclosures are pushed through the clogged up pipeline. What is equally disturbing is that young professionals, those 25 to 34 are equally educated as their baby boomer counterparts but with one major distinction.

That major distinction is massive debt with college tuition inflation. I bring this topic up because this age group of 25 to 34 is the prime customer group for first home buying. While many baby boomers were able to graduate with little or no debt a few decades ago, that scenario is becoming more and more of a distant memory as public schools choked off of state funding are hiking tuition costs. Here in our state the University of California and California State University systems have been raising tuition in the last couple of years to make up for the cuts in state funding. With little blue collar work that pays well, having a college education is seen as one of the safest paths to the middle class but that path is getting more and more expensive. Potential new home buyers will have to contend with student loans even before taking on a mortgage.

[physioex]

1. Weve been talking about this.....

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x863557

[LiberalEsto]

2. Actually, it's suppressing our possibility of retirement

We pay $502 per month for one daughter's private loans. We also pay $70 for the other, who's on deferment. Neither has a degree, neither has a decent job, and we're stuck.

[canoeist52]

3. The next big bubble bursting.

My son and his friends are in this category. No job to pay the college bills. We're supporting two generations. If Social Security and Medicare cuts are passed, we'll be supporting three.

[mike_c]

4. yup-- I finished college in 1989 and grad school in 1995....

I've been paying over $700/month on my student loan debt for almost 15 years and the principle-- about $70,000 for ten years of higher education through my doctorate-- the principle has only declined about $5,000 in FIFTEEN YEARS. I'll reach retirement age in six or seven years. I cannot live long enough to pay that debt off, let alone work long enough. Over my working life I will have helped educate several thousands of university students, helping to fuel the economic engine they constitute in the workforce (and helping to hook many of THEM into the same lifetime of debt and indentured servitude that I've entered).

This is utterly insane. My partner and I are preparing for homelessness when we retire. That's the future we face.

[eridani]

6. This is so fucking insane

I graduated from a private college with $3000 in NDEA loans in 1968. Interest was 2%. Payment was postponed if you went into teaching in certain areas, or into graduate school.

Scholarships and student employment opportunities filled in the rest. If we could do that back then, why not now? I just don't get it.

[LiberalEsto]

8. Try this:

Pay an extra $10 or $20 a month in extra principal. This will save you money on future interest and help reduce the principal. If you can manage to pay more, do it.

People sometimes do this with home mortgages to build equity faster. I've been doing it with my older daughter's loans for about a year and I can see the principal is decreasing at a faster rate.

Also, get an amortization schedule for the loan so you can get an idea of how much principal and interest you are paying each month. At some point you'll be paying more principal than interest, and the balance will drop much faster.

[mike_c]

9. thanks for the suggestions, LE....

I'll follow through on both. I recently started paying extra each month, but I've been doing it for less than a year and so haven't seen much effect yet, but my thinking was that while I'm still working, if I can afford a little more it will bolster my argument later that I've done all I can to demonstrate seriousness about repaying the debt while I'm still working. Honestly though, the only real hope I have at this point is that the bubble will burst and lead to changes in the law, especially bankruptcy law, that make it easier for seniors to discharge their remaining student loan debt.

Part of the problem I face is that my retirement pension will come from the state of California, which has relatively liberal wage garnishment regulations (liberal for the garnishers, that is, not the garnishees). Although I WILL get a state pension if the money is still there in six or seven years, it will only be 40% of my salary and state garnishment regulations allow up to 30% deduction off the top for any judgements. That won't leave much to live on, at least not in the U.S.

[AnneD]

11. I recommend checking out....

Total Money Makeover by Dave Ramsey. Or visit his website www.daveramsey.com and follow the baby steps. It saves you lots of money in the long run by showing you to be debt free. It is hands down the best thing I have found. I have followed it to the letter and dug myself out of a deep hole.

[bemildred]

5. The next bubble to pop. nt

[Purveyor]

7. RELATED: Student Loan Debt Is Now More Than Credit Card Debt

The Biz Beat
Student loan debt is now more than credit card debt

5:41 am April 12, 2011, by Henry Unger

Student loan debt — totaling more than $800 billion — outpaced credit card debt for the first time last year and is likely to top a trillion dollars this year, the New York Times reports.

“In the coming years, a lot of people will still be paying off their student loans when it’s time for their kids to go to college,” Mark Kantrowitz, publisher of FinAid.org, told the Times.

Two-thirds of bachelor’s degree recipients graduated with debt in 2008, compared with less than half in 1993, the Times writes. Last year, graduates who took out loans left college with an average of $24,000 in debt.

The mountain of debt is likely to grow more quickly with the coming round of budget-slashing, the Times writes.

MORE...

http://blogs.ajc.com/business-beat/2011/04/12/student-loan-debt-is-now-more-than-credit-card-debt/?cxntfid=blogs_business_beat

[golfguru]

10. Wrong culprit, the real culprit is lack of jobs

No. of persons paying payroll tax shows millions are without jobs.
Those students can't find high paying jobs and therefore can't buy
a house on top of student loan payments.

A job is wonderful cure for unemployment compensation, healthcare availability,
gov't tax revenues, housing, consumer goods, and self respect. Create jobs and
all the other maladies diminish. Where is Clinton & Reagan, both of whom
created 20 million plus jobs each, when we need them.