Monday, April 21, 2014

A New SAT Question


From the L.A. Times this weekend; "Student Debt Holds Back Many Would Be Home Buyers"

Sarah Luna wants to buy a home in up-and-coming northeast Los Angeles before it's too late.
At 31, she has a master's degree and earns more than $70,000 as a court reporter and freelance editor. She daydreams about trading the Glendale apartment she shares for a little condo, maybe in Echo Park or Highland Park.

Just one thing holds her back: The $700 she's paid every month since 2008, after she graduated from the University of Southern California — with $75,000 in student debt. With about half that total left to pay, buying that condo seems a long way off.

"Honestly, I don't know if it'll ever happen," she said. "Barring some sort of awesome miracle, a down payment is hard to wrap my head around right now."

Of the many factors holding back young home buyers — rising prices, tougher lending standards, a still-shaky job market — none looms larger than the recent explosion of college debt.

The amount owed on student loans has tripled in a decade, to nearly $1.1 trillion, according to the Federal Reserve Bank of New York. People in their 20s and 30s — often the best-educated and highest-earning among them — owe most of that tab. That is keeping a crucial segment of home buyers on the sidelines, deferring one of the traditional markers of adult success.

It is fairly common sense. If students borrow $1.1 trillion to get through school today, that is $1.1 trillion (plus interest) less that they have in the future to purchase a home, invest, buy goods or start a business.

The unlimited money offered by the U.S. government to cover tuition, housing, books, food and "other expenses" (clothes, alcohol, phones, etc.), has been a short term back door boost to the economy that will have lasting negative impacts for years to come.

1 comment:

  1. >>A New SAT Question<<

    1. It should read:

    "A New SAD Question"

    -----
    2. The last paragraph should read:

    "The unlimited money offered by the U.S. government to cover bankers' book holes, has been a short term back door boost to the stock market that will have lasting negative impacts for years to come"

    ReplyDelete