This one falls under the “DUH!” category. Student debt may be delaying the American Dream (Student Debt).
It seems that students are incurring increased debt to cover the costs of their continuing education. This is the result of the rising costs of a college education, coupled with longer stays in college, pursuit of advanced degrees and a tight economy making it difficult for parents to help defray these costs for their children.
For many (and it’s increasing) it’s come down to covering the cost to get the degrees using student loans now, and worry about paying for it later. Unfortunately, if you can’t get a decent job, earning a decent wage, after graduation, the later part becomes quite difficult.
The effect is that the current generation, the Millennials as they’ve become known, is not entering the housing market at the same pace as prior generations. Their timetable has been pushed back.
Some believe this delay is temporary and soon this group will begin their foray in the home buying process. This may be assisted by the agency’s 97% LTV loans and the FHA’s recent reduction in their annual MIP. Let’s hope so. But, depending on the amount of the student debt owed and the payment record on that debt some may be hindered regardless of these programs.
What about the next generation? How about their student debt? There doesn’t appear to be anything on the horizon that might change, or even stem, the tide toward more and more student debt.
You want a quality college education? You have to pay for it and it is getting more expensive every day. What will be the long term effect be on the housing markets and the economy as a whole? Will the government once again hold the key? After all, they are the ones holding all this student debt. Maybe a SLARP program?
Something needs to be done to better control the costs of a college education, and to improve the job market for these students once they graduate. Two years of free Community College ain’t gonna cut it.
More government subsidies will only be another tax on the middle class, leaving them less money to contribute toward their children’s education.
Maybe supply and demand? If college costs continue to increase and the use of student loans become more restrictive, parents should look to find schools, closer to home, offering a quality secondary education at an affordable price. This coupled with an improving economy offering more jobs for graduates, and their parents, may lead to those who then graduate having a better opportunity to pursue their American Dreams a little sooner.
Only time will tell.