What’s alarming is that the student loan crisis could destroy home ownership of most of these students since they are already unable to make their loan payments and no Mortgage lender will be offering them a new debt to finance their home purchase. What that means that in the coming years the pool of 1st time home buyers will decline substantially. By most economist calculations first time home buyers are one of the main catalysts in fueling the rise of home prices.
Student debt crisis started impacting the economy in 2009. With dampening consumption, the economic growth was slowed and as predicted, this slow down in spending also held back the real estate recovery till 2013. Granted that housing prices are on the the upswing, but home construction and home ownership rates are declining and are far from levels reached before 2007.
America is distinctive among advanced industrialized nations with the burden it places on students and their parents for financing higher education. America is also exceptional among industrialized nations for having the highest cost of education with Average tuition, and room and board, at four-year colleges near $22,000 a year, up from under $9,000 (adjusted for inflation) in 1980-81. That’s a substantial increase in the cost of higher education and it’s not sustainable.
The student loan crisis worsened during the Great Recession as tuition costs at public universities increased by 26% (due to cut back as well) while median income declined for most families. In California, inflation-adjusted tuition more than doubled in public two-year community colleges, and by jumped more than 70 percent in four-year public schools from 2007-8 to 2012-13.
There are great odds that no one will rush to rescue these borrower like the politicians rushed to rescue Big Bank and Wall Street. After all, none of these graduate will have enough money or a job to be able to contribute to a Congressional campaign. Who will rescue these borrowers’ you ask!?
We sure would like to meet that person cause the fate of the future home owners of america would be in their hands. Let us know what you think?
will they find help!?