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The Millennials' Future
College Bubble Threatens the American Dream

Getting millennials on the home-ownership ladder is the single most important thing we can do to create a more stable and prosperous future for the United States—but our overpriced higher education system is getting in the way. The Wall Street Journal reports:

Americans continue to default on student loans at a “stubbornly high” rate, and a small share of borrowers are unable to buy homes due to high levels of student debt, according to a new report from the Federal Reserve Bank of New York. […]

The report notes that homeownership rates are far higher for those who graduated from college than those who never earned a degree. But it also shows that “those with significant student debt are much less likely to own a home at any given age than those who completed their education with little or no student debt.”

Homeownership encourages family formation; it strengthens civil society; and it is the best vehicle for middle-class families to save for retirement.

Older millennials have already been set back from entering the workforce at a time of slack labor markets. That is beginning to change, but the combination of relatively low wages, relatively high student debt and high home prices thanks to anti-development policies have seriously damaged the prospects of millions of young and youngish Americans.

Making housing work for the rising millennial middle class should be job number one for policymakers. And finding cheaper alternatives to the bloated higher education system—by breaking the accreditation cartel, fostering vocational education, and making colleges have skin in the game—is an important part of the answer.

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  • Dan Kearns

    Homeowners, like all asset-holders, have been bailed out continuously by huge liquidity flows whenever there has been a chance that they would suffer since at least the 1987 stock market crash. We killed consumer price inflation only to replace it with asset price inflation that benefits the richer and the older. Capitalism doesn’t work if people who choose any old asset, productive or not, are always bailed out.

    • FriendlyGoat

      I wonder if anyone has noticed that the more high-end tax cutting we do, the more asset price inflation we see.

      • Boritz

        And incidence of crime tracks with the number of churches in a city.

        • FriendlyGoat

          I’ll do asset inflation. You can do crime.

      • seattleoutcast

        I’d like to see some charts that prove that assertion.

        • FriendlyGoat

          Why do you need a chart? We have been aggressively cutting taxes in spurts since 1978.
          We have had dramatic increases in asset prices—–land, buildings, equities, collectibles ever since.

          • Angel Martin

            Weimar had dramatic increases in the value of land, buildings, equities and collectibles… tax cuts were not the cause

          • FriendlyGoat

            A defeated society chafing under a burden to pay reparations, then wracked by the Great Depression, is not an apt comparison to an understanding that low-taxing the gains from trading is a good way to create crazier and crazier valuations in stuff being traded.

  • FriendlyGoat

    Maybe the investors and investor pools who bought up houses on the cheap for rentals in the wake of the housing crisis would now like to sell them to millennials for the same low prices they paid? Why wouldn’t that be a nice “favor” from older folks to younger folks?

    • Dale Fayda

      Or better yet, why don’t YOU sell your house to a millennial for the low price YOU paid and move into a studio apartment? That would be a nice “favor” to younger folks, wouldn’t it? After all, you don’t need all that space any more and you’re in your twilight years anyway – how much longer do you have left, realistically?

      Or even better still, why don’t you sell your house for what you first paid for it to an oppressed minority! Brilliant! So check your white privilege and give it up, grandpa!

      • FriendlyGoat

        Rental houses were my subject, Dale. RENTAL houses. You know as well as I do that the bargains went to the ones with the ready cash—–and that wasn’t the kids. Some pools bought thousands of them. It’s not unfair to point out how something actually works (or worked) since TAI is casting about with some rather silly explanations for the plight of younger people.

        • Dale Fayda

          Then you are well aware that all businesses are in it to make money and not for altruistic reasons, like selling real estate at a loss (there are always maintenance costs, taxes, etc. in addition to the purchase price).

          Bargains ALWAYS go to those with the ready cash, unless the government steps in and queers the market, just like it did prior to the real estate crash of 2007. Back then, the taxpayer subsidized bargains went to those with virtually no cash, in many cases NO cash whatsoever. Is that better, in your opinion?

          I grant you that my suggestion to you was non-sensical, just like your suggestion that commercial entities purposely lose money on housing transactions, just as a “favor” to younger folks. Mine was meant to be hyperbole – were you serious, though?

          I’m assuming the investors’ motivation for that would be their “sense of social responsibility”, yes? If you sincerely believe that should be a strong factor in real estate pricing by private sellers, then I’d like to see you lead the way in that regard.

          • seattleoutcast

            FG simply doesn’t understand economics and the importance of saving. He’s living in a fantasy world supported by irresponsible spending by the government that makes his children and grandchildren debt slaves.

        • ——————————

          Yes investor pools bought most of them in Cali. where I lived, and in the rest of the country too. They would buy them in large blocks directly from lenders without going through the auction process, and would get a steep discount. If they didn’t buy them there would have been a disaster of neighborhoods filled with vacant houses and continuing vandalism. They bought them, fixed them, and rented them or sold them. If those cash buyers weren’t there this country’s housing crises would have been far worse and lasted longer. I even bought a few at the courthouse auctions and fixed and flipped them.

          So what did the investors do wrong that they should do a freebie for the millenials?

          TAI is not being “silly”. Academia, and those who only hire requiring a degree, are creating a huge financial drain on the young…and I think you know that….

          • FriendlyGoat

            Thanks for your explanation of why you are arguing. I could not have known that an original comment would cause you to think I was trying to step on your personal toes.
            In the run-up to 2008, a bunch of younger people were sold houses at bubble prices. Then, when the values dropped, they were foreclosed and run out. Then the government rescued the lenders in several different ways. Then the rescued lenders were able to offer “opportunities” to cash investors, instead of to either those foreclosed or to a newer group of young people—–now—– a decade down the road. If the younger people feel like they were screwed by the whole process, well, they were.

            Now, perhaps they should also take a look at WHO is asking them to be over-educated (and relatedly over-indebted) in order to be offered a piece-of-the-pie job. Is it their own young generation doing the hiring and demanding those credentials? Or is it the older generations who insist on all that?

          • Anthony

            The “back and forth” brings to mind this (A New Awakening): http://www.nationalaffairs.com/publications/detail/a-new-awakening

          • FriendlyGoat

            Lots in there, thanks. I agree that we could use a Great Awakening. You probably would not have trouble imagining that I would differ with George Weigel on what it should be about and who might lead it.

            First of all, it is not my goal to knock Catholic priorities and I would not be bringing this up except for this article. But the Casey and Obergefell decisions are not the main problems in the USA. They are not the correct fodder to use for a big piece on what needs to be awakened. Neither is it a good idea to knock the human self in the 21st century as though we cannot make ourselves much better by simply dwelling on the most simple thing in the Bible. We don’t love our neighbors as we love ourselves nearly as much as we could, and we should talk about it all the time instead of talking about things such as this excerpt from Weigel:

            (“Today, those inspired by Havel and his colleagues, non-believers as well as believers, will live “as if” there were truths built into the world and into us, truths that we can know by reason. For “living in the truth,” in the new Awakening that can revitalize American public moral culture, will mean recognizing that what is often described as a decline or abandonment of democratic values is in fact the decline and abandonment of the truths about the human person that are essential to democratic self-governance.”)

            I would suggest skipping stuff like that and writing instead forty reasons why loving our neighbors was given to us as a good idea and something not necessarily “built into the world and into us” at all. We needed to be told what the best path is. We were told by THE founding authority on Christian religion. Yet, we spend so much time theorizing on everything ELSE.

            For abortion, my take for the church priority is this. It is a matter of messaging to men: “Don’t get women pregnant who do not want to be pregnant.” For LGBT matters, my take on what the church position should be is this: “Hey, it’s none of our business.” (As you know, and more importantly—-I know—-they didn’t ask me for that and will not be doing so at any time in the future.)

          • Anthony

            Yes, lots in there (Living in the Truth) and you’re welcome. Now when I sent you link, I knew you and George Weigel differed in key respects. But I also knew the gist of the long essay spoke to your human orientation – Weigel’s specific focus aside. It was that recognition spurring the link.

            “It is a massive advertisement for American weakness, not weakness in a quantified way but weakness at the nation’s heart, rottenness at its core. Since its formation America, despite its grievous faults, has endured as ‘a city upon a hill’ – invoking the Puritan vernacular – an example to the world…Though, this election, by contrast, is a display of American ugliness, vulgarity, and selfishness. What nation will want to duplicate the American rule book after this event? What nation would want to follow American democracy?”

          • FriendlyGoat

            Yes, I too was struck by Weigel’s selection of that to quote from Paul Kelly, an Australian commentator—–early in the essay. It sounded profound to me——but not in a way calling for Weigel’s eventual reversion of subject to abortion and gay marriage.

            We can look at the 2016 campaign and its result and conclude that something is going terribly wrong with the American “we”. Indeed, most of us can sense the “ugliness” going on in our politics and our culture. For a “Catholic” message or diagnosis of what to do about such a problem, I would always be interested in hearing from Pope Francis. I get the feeling Mr. Weigel might be one of those from the Catholic camp who kinda sorta likes other popes better than this one and writes accordingly. He COMPLETELY lost me with this:

            “Reforming our moral culture will require a short game and a long game. If the new administration manages to keep Leviathan at bay for the next four years, reins in the regulatory state, and reconfigures the Supreme Court so that it no longer functions as Leviathan’s super-legislature, space will have been created for immediate short-game action that addresses some urgent issues.”

            Celebrating in any way the remake of the Supreme Court by Donald Trump and Republicans is a non-starter for me. So, I wrote off Weigel and concluded he is really just riding the same old two issues when we are desperately in need of better insights.

          • Anthony

            I think George Weigel is attempting to pursue the Richard John Neuhaus’ informed public philosophy vis-a-vis ordered liberty. I agree with you that Wiegel’s conservatism and specific intent (in essay) inclines towards TAI’s center right essayists’ views. However, I am less concerned about the author than the message: Living in Truth. Most importantly, I respect and understand his exegesis that politics and law cannot resolve America’s Anthropological Crisis. With that said, like you I recognize his Catholic underpinnings but am not alarmed (full disclosure: I attended a Jesuit undergraduate University). For me, George Weigel’s A New Awakening raises two important questions (in reality he raises many): What happened? and Now what? “Democracies like the American republic are not machines that can run by themselves – the task is to see that this democratic messiness does not completely devolve into democratic dysfunction. And that requires the rebuilding of….”

            F.G., a multi-generational task is ahead so let’s begin.

          • FriendlyGoat

            “What happened” is that we are nationally going stupid. “Now what” is the period of darkening which occurs as a result of going stupid—–until a sufficient number of people notice that stupidity is the problem.

            I too like the concept of Living in Truth. For many Catholics like Weigel, that means preserving the doctrine and the institution above most everything else. For Evangelicals, it means electing the hardest-edged conservatives they can find. For me, it means we have to stop pretending that “moderate” is a dirty word suitable only for describing those we ran (or are running) out of the arenas of public discourse and policy.

          • Anthony

            “What happened is that we are nationally going stupid. Now what is the period of darkening which occurs as a result of going stupid—-until a sufficient number of people notice that stupidity is the problem.” (FriendlyGoat)

            You cogently and to my mind sum it up well! Equally, your last paragraph goes directly to the meaning of “words and ideas” (moderate) as dictated or really understood in present discourse. A discourse that ought to be by a sense of fact, commonly shared. But alas as your last paragraph infers there is no such case currently; and we are left to our “judgment” which in most instances may be either befuddled or unmoored relative to the fantaszing of politics – we’ve cast aside the integrity of words while operating by choice in private and disparate realities. So, F.G., let’s begin.

          • ——————————

            Your original comment put the onus on the investors to sell to young people for a loss, and that is an emotional comment devoid of clear thought.

            People of all ages ‘bought’ houses at bubble prices. Those were the prices at that time. If you wanted to sell at that time you would have sold your house at the price of that time to anyone who wanted to buy it, right? You would not have sold it at a discount to a young person because you felt your house was over-priced, right?
            As far as the bubble, well it was ‘largely’, but not entirely, created by lending rules that were put in place by the government. See links below;
            https://en.wikipedia.org/wiki/Causes_of_the_United_States_housing_bubble
            http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6

            The lenders offered deals to large investors because they needed to get the losing assets off of their books as fast as they could so they could move on. Anytime you make a cash offer, especially when you also buy in quantity, you get a deal. I buy for cash. That is business 101.
            The lenders did sell to buyers who were using loans, but loans were hard to get at that time because lenders were scared, and so was the government who backs those loans. Lenders also let people renegotiate their loans, but it was not enough. So many people walked from their loans that the market was flooded with vacant homes.
            I do not agree with the bank bailouts. I think it should have been done differently. But I also think that the government should not have got so involved banking by making it so everyone should be able to have a house by loosening the lending standards.

            Your last paragraph mirrors what I said in my first comment….”Academia, and those who only hire requiring a degree, are creating a huge financial drain on the young”.
            And I think you have read enough of my comments on TAI to know how I feel about academia, and college degrees….

          • FriendlyGoat

            I was not knocking people who are individually fortunate enough to buy a foreclosure and live in it or make money on it. I bought one myself when I was only 25 in 1976 directly from the local bank that foreclosed it from a guy who got over-extended in business. I put 1/3 down. That same bank lost nothing, loaned us 2/3 and was not the subject of any bailout. We lived in it ten years.

            On a macro level, if we disagree with the “bank” bailouts after 2008 and wish they had been done differently, how would that be? Suppose we had helped homeowners make payments so that banks weren’t broke, bonds weren’t toxic and there was therefore no crisis? The way we did it, after all, left the foreclosed “out”, gave windfalls to the wrong people, and still have savers’ bank-deposit savings paying near nothing. I think we might all want to ask what other options could have been.

          • ——————————

            I understand you weren’t knocking individual investors, but no reason to knock the large investor pools either. They were just doing it on a larger scale and taking advantage of opportunity. They did not cause the problem…the government largely did with the CRA, along with help from some private business.

            I think the government should have slowly backed off of their lax lending guidelines when they saw the bubble start to grow (remember 125% LTV loans, and NINA – No Income No Asset loans, etc.). If they would have read the tea leaves they could have prevented the problem. They waited too long, just like they did with the equities markets in the 90’s. But being that they did not intervene by adjusting guidelines, I don’t know what would have been the correct (and realistic) path. I can’t honestly say your idea wouldn’t be at least partially correct. I just don’t know enough about that very complicated situation to be able to offer a viable solution.
            What I do know is that what was done was wrong…and helped, as you say, the wrong people. I lost plenty in the ’08 crash, and did everything responsible up until it happened…no stupid loans, meticulous credit, plenty of skin in the game, lots of successful experience, etc….where is my bailout?….

          • FriendlyGoat

            Your last line is really the issue. Bubbles occur when the participants are having SO much fun making SO much money and tend to think there is no direction but up—-houses, stocks, tulip bulbs once upon a time. But real people get hurt badly when the bubbles burst. Then there is little to do for the real people—-and, sure enough, little is done for them

            You may remember that Alan Greenspan was once criticized for temporarily roiling the stock market in the 90’s by saying “irrational exuberance”. We actually needed more of that talk, not less, before the tech stock crash and before the real estate crash, no?

          • Jim__L

            Young people in the market for a house in 2008 (such as myself) could choose not to buy. And that’s what we chose, until the market got more reasonable in 2009.

            By the way, the reason the markets were so crazy back then is that FHA was insuring adjustable-rate mortgages for far more than the borrowers could hope to pay off.

            So, the Federal Government was the enemy here, while lying (possibly even to themselves) saying they were everyone’s friend.

    • seattleoutcast

      In a bust cycle, the savers (you know, the responsible ones) were supposed to get the houses on the cheap. But Bernanke et al ruined that.

  • Boritz

    The cost of higher education and the sorry saga of its track versus inflation reflects a scheme by which wealth was transferred from much of the public to the academy, an important liberal client. If policymakers decide to tackle Millennial home ownership as ‘job number one’ as the article suggests, they would probably approach it the same way they did college affordability: Allow Millennials to take out huge loans they can never possibly repay even as the price of housing soars driven by the availability of more money for mortgages. There was never a concept of loan-to-value in the case of loans for a college education. Listeners to Dave Ramsey’s program regularly hear him tried collars for the amount of money they borrowed to get a menial job. Let’s do away with LTV for housing as well.

    • Fat_Man

      You got it. Demand side subsidies, supply side restrictions. That is the pattern for all Federal market interventions.

    • Curious Mayhem

      Exactly. Academia is the most reliably blue of all sectors of the economy. As Megan McArdle put it, the bubble in college costs has removed most of the economic advantage of going to college in the first place, by sucking away most or all (or more) of the future income increment grads earn over their careers.

      The bubble in tuition is really a bubble in costs, as the cost structure of higher ed has exploded in the last generation. The biggest reason is a massive expansion of non-academic professional staff to run all those wasteful offices of this and that (diversity, sustainability, sexual conduct, speech controls — the whole repressive and bloated apparatus). It’s certainly not reflected in the money spent on teaching or research, which has undergone no comparable explosion.

      It will come to an end, but the day when it could be done by sympathetic insiders who want to save higher ed is long past. It will be done instead by unsympathetic outsiders, who will slash and burn. I can’t say academia doesn’t deserve what’s coming to it. It’s been on a criminally reckless course for 25 years.

  • johngbarker

    If you think college costs are prohibitive, try buying a house in San Diego or nearly anywhere else in a good neighborhood in the US.

  • Big college debt — like having a mortgage but no house.

  • Andrew Allison

    Finding cheaper alternatives to the bloated higher education system—by breaking the accreditation cartel, fostering vocational education, and making colleges have skin in the game should be job one. The ability to purchase housing will follow.

  • D4x

    Any college-debt-laden millennial who buys a home that is still affordable in 2017-, is really going to wonder why they did not learn plumbing instead of ____Studies. Asset inflation has changed the historical dynamics of home buying as investment, especially since 2000.

    I would have been better off financially buying $1,000 worth of Home Depot stock in 1991 instead of my first house.

    • ——————————

      Definitely better to learn plumbing…at least it is a ‘real’ job.

      But would you have known in ’91 that HD was the stock to buy?….

      • D4x

        I thought it was a good idea as I was suddenly shopping there every week, but had been taught to avoid individual stocks.
        The value in 2000, before that correction, was $1.5mil, as I read in 2001, in a reliable source.
        Since my last house has been turning into a mystery nightmare (unsaleable kind of mystery), probably should not be in this thread. Just no longer believe 2016 price levels can ever be as ‘profitable’ to first-time buyers as TAI believes, except for those who stay in place for 30 years. In my case, too many moves. Sorry.

        • ——————————

          I think housing can be profitable or fairly affordable depending on where you live. It’s not as good of an investment as a winner stock, but it is a lot easier to find.
          Housing is pretty cheap in Texas…and probably in most of the South and lower Midwest…but it is hard to buy your first house anywhere , or even qualify for the loan, when you have college debt that is like it’s own mortgage….

    • Jim__L

      Are you counting all the money you tossed down the rat-hole of rent, or simply the fact that Home Depot stock appreciated more than your house did?

  • Fat_Man

    Wage and price controls on Colleges.

    • Pait

      Right. Market economies are all right unless the outcome is not what I want. Then the government has to intervene to prevent a business from staying successful.

      • Fat_Man

        Higher Ed in the US resembles a market economy in the same way that Calvin Coolidge resembled the Metro-Goldwyn-Mayer Lion.

        • Pait

          There are thousands of universities and colleges; students are free to choose from them; they compete by offering varied types of services, tuition packages and cost structures. Yes, a market it is.

          • Fat_Man

            Most of the money comes from the government. Most of the schools are governmental units. The ones that aren’t are mostly non-profits that in the governments pocket up to their elbows. Real markets have more than consumer choice.

          • Pait

            No it does not. You have the right to your opinions, but you should check the facts about university income if you want the opinions to be listened to. Pick a few universities and check out where the money comes from.

          • Fat_Man

            Look, if I wanted to do research, I wouldn’t write blog comments. University financial statements are not however a source of enlightenment. They will for example show as tuition receipts money received from the government as “student loans”. It is money from the government that the student never touches. They do not show the net benefit of various tax exemptions. And on and on and on. If it were not for government money we would be discussing whether college teachers should be eligible for the $15/hr minimum wage.

          • Pait

            Right, and if you invent your own facts, then why would anyone waste more time reading your argument?

            I can’t resist one last thing before declaring that you won the debate and closing. If tuition payed with a loan is government money, then why is a house payment with a mortgage any more real?

          • Fat_Man

            “why is a house payment with a mortgage any more real?”

            It isn’t. Especially when a substantial down payment isn’t required. That is why mortgage markets are defective and why the Panic of 2008 occurred.

  • Maybe the government should be finding ways to forgive or relieve more college debt from millennials…the cost of tuition these days combined with total living expenses is no small thing to handle, even for someone with a full-time job.

    • J K Brown

      So take tax dollars from those who didn’t go to college, but found a way to make a living in say the trades and use it to forgive the 4-5 yr sex vacation of those supposedly “smarter” of their generation? How very socialist.

      • Fat_Man

        But, a bad debt, is a bad debt. The problem isn’t the write off. Its the loan in the first instance. The way to handle bad debts is bankruptcy. The problem with college loans is that they are exempt from bankruptcy. Ergo, they cannot be dealt with.

        • f1b0nacc1

          Ah, but in the case of student loans we are talking about individuals who (more often than not) have no assets, and got the loans when the likely had even less. If you make the loans dischargable in bankruptcy, then who in their right mind would issue them in the first place? The standard practice would be to run up the debt while in college, then quickly declare bankruptcy immediately upon graduation. Yes, the consequences of bankruptcy aren’t fun, but when you are just starting out they are certainly less serious than a huge debt overhang. I would imagine that if we actually saw mass bankruptcies of the sort I am describing, over time the pressure (from parents and students) to ameliorate these consequences would become significant, just as they are with student debt.

          With all of this, I find it extremely unlikely that anyone with any sanity at all would participate in giving student loans unless they had some reasonable expectation of being able to collect them. So you would see the loan market dry up, which in turn would create a huge financial crisis in the hugely overextended academic sector.

          • Fat_Man

            “create a huge financial crisis in the hugely overextended academic sector.”

            And that is not a good thing?

          • f1b0nacc1

            Actually I think that it is a fine idea, at the very least it will force a major correction in the academic sector and at best it might cripple it beyond repair.

            One must dream….

          • Pait

            Notice however that almost all of the recent increase in bad college debt is from the for-profit college business. The traditional state, community, and not for profit education sectors have much lower rates of default.

            The top universities and liberal arts colleges, such as Middlebury, Berkeley, and Yale, those the some folks here seem to hate so much, have minimal defaults.

          • Fat_Man

            “almost all of the recent increase in bad college debt is from the for-profit college”
            link?
            “The top universities and liberal arts colleges, such as Middlebury,
            Berkeley, and Yale, those the some folks here seem to hate so much, have
            minimal defaults.”
            They have wealthy students.

          • Pait

            They have wealthy students. They also have students that are not wealthy, and clever pricing systems that allow them to recruit the ones they want and need in order to maintain their reputation for quality instruction.

            You are giving lots of opinions but don’t know what you are talking about.

          • Fat_Man

            “who in their right mind would issue them in the first place?”

            No one. But, we have the government doing it. Draw your own conclusions.

          • ——————————

            “So you would see the loan market dry up, which in turn would create a huge financial crisis in the hugely overextended academic sector.”

            That’s what needs to happen…but not just open the doors and allow everyone to BK all at one time, do something that allows it to unwind less dramatically, but treating student loans with special privilege is anti-market, and wrong.
            The artificial environment that student loans are given in is what has created the problem of run-away tuition inflation.
            Student loans need to function in normal market conditions….

          • Fat_Man

            An uncollectable debt is an uncollectable debt. Nihil ex nihilo fit. There is no lipstick that you can put on it. The best thing to do is not to throw fresh resources at it. That is why we have bankruptcy proceedings. To allow debtors and creditors to draw a line under the past and get on with their lives.

          • ——————————

            No lipstick should not be put on it, but we don’t need another crisis either. I am sure there is a way to change things without creating another crisis.

            And yes, we should not “throw fresh resources at it”.

          • Fat_Man

            The write off of bad debts should never create a crisis. It does not cause a cash flow problems. Crises are caused by cash flow problems, not balance sheet changes.

          • Fat_Man

            “Student loans need to function in normal market conditions….”

            In normal market conditions there would be no student loans. Without the government’s guaranty no one would would lend money to a child with no assets, no earnings, no occupation, and no track record.

          • ——————————

            That’s exactly what I was getting at….

          • f1b0nacc1

            I don’t disagree with you in principle, but as long as student loans are primarily directed at 18 year olds with few/no marketable skill, few/no assets, and little or no money to put down on the loan, normal market conditions simply won’t work. Short of a mandatory indenture to the loan originator (that wouldn’t last 5 seconds in any court that i can think of), what possible basis would there be for any sane organization to originate even a single student loan?

            A massive crash, followed by the drying up of such loans would force a transition to my desired 1-2% of the population attending a university, but the intermediate costs of such a transition would be extremely high, and unless the broader environment that makes such degrees the essential entry pass to the middle class the social effects would be catastrophic.

            I offer the following compromise:

            1) A complete reversal of Duke v Griggs
            2) Adding ‘non-essential skills-based educational credentials’ as a forbidden basis for discrimination (i.e. you cannot require a college degree, though you could require demonstrated skills in a particular field – though not just a classroom study)
            3) Phased withdrawal of all student loan support (including deductability and direct support) at the federal level over a 10 year period
            4) Termination of all support for schools that hire/employ ‘superstar’ (i.e. non-teaching) faculty
            5) Anti-trust action against the Ivy League
            6) Termination of all support for schools that engage in any college sports other than intramural activities (i.e. no sports programs, no scholarships, no coaches…think of it as the NCAA’s death penalty with extra teeth)
            7) Termination of all support for schools which encourage foreign students to enroll at full price when equally qualified (or better qualified) domestic students are turned down

            With any luck, that should bring the total number of enrolled students to under 3-5% within 10 years, and under 2% (my preferred target) within 20.

          • ——————————

            That’s a great list of ideas, and it would allow a slow transition to more civically advantageous levels of academic pursuits.
            We’ve discussed #2 before in another thread. I hope it will be made law. It is blatant discrimination.

            My point (though a bit clouded) about “normal market conditions” in my original comment, meant that there would be, as you say, virtually no student loans…as it should be….

          • f1b0nacc1

            Thank you for your kind response….

            I agree with you that there wouldn’t be (and shouldn’t be) student loans…my proposals (and they *ARE* a compromise….my preferred position involves napalm and reeducation camps…grin) are merely designed to minimize the damage associated with the adjustment period

          • ——————————

            In the immortal words of Lieutenant Colonel Bill Kilgore: “I love the smell of napalm in the morning”….

          • f1b0nacc1

            “Someday son, we’re going to win this war…”

        • J K Brown

          I got no problem with letting student loan debt be discharged in bankruptcy. Just so long as they surrender any credential awarded and their transcripts are erased. They can keep any knowledge, skills they acquired, but not the record of how they acquired them. You don’t get to keep your car, if you seek to discharge the car loan in bankruptcy.

          Bonus, this will give the most benefit to those students who acquired debt, but didn’t graduate. I would also clawback from the schools to discipline their admissions/programs to tuition costs.

          • Fat_Man

            You are asking them to surrender their hard won degrees in womyn’s studies? The humanity!

          • J K Brown

            Hey, they can still trade on any exchangeable knowledge they gain.

  • Anthony

    It is well known that, over time, the s and p 500 outperforms other asset classes. In contrast, real estate merely tracks the rate of inflation. Therefore, index funds are the best option for young people looking to prepare for retirement. Is via meadia really unaware of this?

    Live in the cheapest abode you can tolerate and put every penny in an index fund. Or perhaps better yet, a small cap value index fund, which is available at Vanguard.

    • Anthony

      Anthony, you’re back! Give us the generational (recent college) perspective.

      • Anthony

        My previous email was hacked. So I need to re-register

        • Anthony

          You could have registered for less potential confusion (given our common title) but hey…

  • Pait

    The premise that “home-ownership… is the single most important thing we can do to create a more stable and prosperous future,” as referred to in a previous post, is a non-sequitur. Home-ownership is just another form of paying for housing – with advantages and disadvantages with respect to renting.

    The main disadvantage is the risk of tying up too much capital in one investment.

    • Pait

      By the way, the idea that owning a relatively costly house is a “good thing”, an investment, while paying for an education is a “bad thing”, a costly expense, is just plain silly.

      • Jim__L

        Depends on the degree.

        Engineering will usually net you a profit. Majors ending in “-Studies” not so much. Humanities, social science? All questionable investments.

        Medicine was formerly an investment with good long-term prospects; these days, with doctors’ salaries coming under the microscope, who knows? I know of at least one student who’s going PhD biochem instead of MD (which would be following in her father’s footsteps) because she can’t afford it and doesn’t want to take out loans.

        Law is also getting to be a trap, what with automation in the legal profession nowadays.

        Even aside from all those considerations, education — getting knowledge into a student’s head — is EXTREMELY cost-inefficient at the university level, as we can see from the low (free!) prices offered by online courses nowadays. This is a massive cultural change, and it’s a change for the worse.

        A generation ago, colleges charged far, far less — and that allowed people with college degrees to actually BE middle class and spend as such, instead of debtor-slaves working off their indenture to bankers. It bears repeating — the middle class grew in this country because people could attend college (which typically had few frills or amenities) for not much more than cost. That gave them a really, really good start in life.

        The idea that anyone who will see a marginal benefit from a college degree should take out all the loans necessary to procure one, and that universities should raise their prices all the way to the point that marginal students receive minimal benefit, is a HORRIBLE idea, and is one of the reasons the middle class is disappearing.

        There are three institutions at fault here — one is the government, for supporting loans; one is the banks, for taking on those loans; one is the universities, for inflating their prices with (and sometimes even without!) ridiculous frills and amenities, (and let’s be clear: political indoctrination) that more often than not detract from the process of learning.

        All three need to be curtailed, to make college a path to the middle class again, instead of a path to bankruptcy.

        • Pait

          I understand that you have a beef with universities. That may be because you misunderstand education as “putting facts inside students’ heads” or something like that. The fact is that there are hundreds of universities that compete with each other for the money of the students who would happily pay tuition and fees. The system has many features of a competitive market. You’d like the government to ban markets when the benefits are not distributed the way you prefer.

          Nevertheless, the idea that owning a house is a “good investment,” the more of it the better for the country; while paying for an education is a “bad expense” that should be as cheap as possible, remains just plain silly.

          • Nathan Hayes

            The issue is not that there isn’t a competitive market for tuition dollars; it’s that tuition everywhere is in a massive bubble, driven by is that easy money, in the form of government loans. And since student loans are not dischargeable in bankruptcy, neither the government nor government backed lenders have any check to make them disciplined in lending decisions.

            Housing crashed because of bankruptcy – the lenders got bailed out, yes, but there was a clear market corrective. What’s the corrective on higher ed? Absent bankruptcy, it’s going to be institutions closing and going bankrupt themselves because students are no longer willing to take on debt to afford sky-high tuitions. And we’re already seeing the beginnings of that.

          • Pait

            The easy money is almost exclusively in the for-profit, take the money and run sector; the traditional state and nonprofit colleges function pretty much the way the did before. The driving issues are quality, and reputation.

            I agree that there is no reason to exempt student loans from bankruptcy laws.

          • Jim__L

            The idea that “traditional state and non profit colleges function pretty much the way they did before” is laughably false.

            Administrative bloat and mission creep towards political indoctrination are far more common in non-profit academia than for-profit.

          • Pait

            The do not have loads of easy money coming. And they do not have a difficult time attracting students.

            You may not like the product they offer. It is your right. Their customers do. I see that this annoys you no end.

  • Fat_Man

    “The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But home ownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.”

    Instapundit
    Dubbed Reynolds’ Law

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