On the front page of Saturday’s Real Estate section, The New York Times has done a decent job of tying together the student loan crisis and debtors’ resulting lack of participation in the larger economy, although I think they could have picked some better examples.
Admirably, the article includes a quote from one student loan debtor stating that she didn’t really know what she was doing when she agreed to thousands of dollars’ worth of student loans when she was 18 or 19. I find that many articles on the student loan debt crisis manage to skip this point: That we expect recent high school graduates to make one of the biggest financial decisions of their lives, in a world where they are not presented with many alternatives and where they have not been adequately educated about the consequences of such a huge financial burden. Instead, our culture of personal responsibility tends to overlook that issue so that the focus turns to how the 18-year-old must not have been thinking straight when he or she agreed to such large student loans. (Really? And how good was your financial education in high school?). Many forget how quickly college costs have skyrocketed, and how much those costs have outpaced wages and inflation.
Most student loan debt clients I see have far higher student loans than the 2 people featured in the article, who have student loan debt of $30,000 and $19,000. The second person featured seemed to have more of a problem with the high expenses of life in Manhattan than with his fairly low student loan bill – especially low considering that it included an undergrad degree in chemistry along with some graduate education, because he’d had a good scholarship. Many clients I see have student loan debt north of $100,000 and would appreciate having debt of less than half that amount. Considering that many colleges charge tuition of around $50,000 a year, such high student loan debt is not all that unusual anymore.
But I give the Times credit for shining a light onto the problem of student loan debtors being unable to purchase real estate as a direct result of their student loan debt.