Can you believe there has been gambling going on here? The brilliant PhDs at the Federal Reserve have concluded that if you load $1 trillion of student loan debt on the backs of millions of young people who drop out of college because they shouldn’t have been there in the first place or can’t find a job in African Studies or Lesbian Studies with their liberal arts degree, they aren’t able to buy cars or homes. Shocking!!!
This is government policy at its finest. The morons in Washington DC never see the unintended consequences of their actions. The began to dole out student loans by the billions in 2009. Obama and his minions did this to artificially lower the unemployment rate. A student doesn’t count as unemployed. Half the kids in college aren’t academically talented enough to be in college. But they were dumb enough to go into debt up to their eyeballs. A dumbass with $100,000 in student loan debt is the ultimate subprime risk.
Student loan debt delinquencies are already skyrocketing. Millions of young people will se their credit ratings destroyed, making it impossible to get a car loan or home loan from a legitimate lender. Of course, they can always get a car loan from Ally Financial (80% owned by Obama) because the Feds don’t care about getting repaid. The bill will just be passed to you.
The Washington political hacks and the government drones averted a short term public relations problem by dishonestly lowering the unemployment rate, but have created a much worse long-term problem. They have enslaved millions of young people in debt for years. These young people will not be able to form households and buy new cars. This disrupts the entire economic system that requires move up buyers to keep the real estate market going. The liberal Keynesian stooges have gambled and lost again. I’m shocked, I tell you, shocked!!!
Those with student loans now less likely to own homes and cars, study finds
From 2003 to 2009, the homeownership rate for thirty-year-olds with student loans was higher than for those without. That makes some sense — those with student loans have higher levels of education, on average, and therefore higher income.
But a New York Fed study by Meta Brown and Sydnee Caldwell now finds the situation has reversed. By 2012, the homeownership rate for student debtors was almost 2 percentage points lower than that of nonstudent debtors. Vehicle ownership also has flipped, so that nonstudent debtors on average are more likely to own a car.
What’s going on? The New York Fed suspects it’s lenders who have tightened their underwriting standards. “By 2012, the average score for twenty-five-year-old nonborrowers is 15 points above that for student borrowers, and the average score for thirty-year-old nonborrowers is 24 points above that for student borrowers,” the New York Fed finds.
The trend has important implications, the authors say, with student loans now the second most prevalent form of debt in America, only behind mortgages. “While highly skilled young workers have traditionally provided a vital influx of new, affluent consumers to U.S. housing and auto markets, unprecedented student debt may dampen their influence in today’s marketplace,” they said.
– Steve Goldstein