Student loans
are killing the economy! Student loans are the next bubble that will
burst! The sky is falling! Headlines
such as these seem to come out every day. Some are sensationalistic, while
others have a kernel of truth. I think everyone knows that student loan
indebtedness is hindering some aspects of the economy…..after all, when one has
a huge student loan payment, he or she has less disposable cash to put back
into the economy. If the majority of one’s income goes to Sallie Mae, FedLoan Servicing,
Nelnet, or another servicer, then one is less likely to buy a new car or house.
No one is
exactly sure how much of an impact this will have on the housing market. According
to USA today, "your student loan is killing the housing market." This could be true…after all, who can
afford a student loan AND a mortgage payment? Well, many people can...if their loans are small enough, if their income is high enough, or if they have an income-driven repayment and understanding loan officer.
Thankfully,
buying a home is still an option for many people with student loans, provided
the application process is done strategically. Student loans are becoming
commonplace for young people…student loans are essentially the new tattoos
(many people have them, they are no longer uncommon). For those under IBR or
other income-driven repayment plans, some underwriters and loan officers
understand IBR. See:
Here are some
solutions that people are working on. I’m trying to include multiple points of
view here, economically and politically speaking…..
*A potentially bi-partisan understanding:
*Obama has
proposed that higher education become more affordable, that borrowers have
greater access to FHA loans for houses, etc. http://www.whitehouse.gov/the-press-office/2014/10/09/fact-sheet-president-obamas-agenda-creating-economic-opportunity-millenn
*Marc Cuban’s
solution: http://www.inc.com/graham-winfrey/mark-cuban-on-his-plan-to-fix-the-economy.html
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