Your choice: A house or a college degree

[Liberal_in_LA]

Your choice: A house or a college degree

The increasingly heavy yoke of student loan debt means that a generation of Americans is choosing education over homeownership, whether they realize it or not.

A housing industry adviser last week pointed out to clients -- banks, builders, manufacturers and investors -- that student loan debt has become so huge, nationally, that it could be interfering with the housing recovery.

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Palacios wrote a blog post, "Skyrocketing student loan debt will delay homeownership." "Student loan debt now totals $865 billion, which is greater than all credit card debt outstanding, as well as all other types of household debt except for mortgages!" he says.

Young Americans are, by default, choosing college, it appears. But it's unlikely that many will really perceive the choice they made until years later.

College-educated workers do earn more than workers without college degrees. But, on average, incomes of Americans under 44 have, at best, only held steady (after inflation) in 20 years. It takes a lot of earning power to pay off massive loans and save a down payment.

http://money.msn.com/debt-management/article.aspx?post=f75dafa1-a024-45c8-9e79-20f72416f587

[mike_c]

1. that is exactly the choice I made nearly 20 years ago....

The big cost for me wasn't college-- it was grad school. Nonetheless, I knew I was mortgaging my future in order to get my doctorate-- there were no other choices available. It was the right decision for me-- even though it will likely condemn me to homelessness in retirement. Having to make that decision is just wrong, however. We are the wealthiest nation on Earth. Our students should not have to mortgage their futures in order to realize their greatest potential for lifetime service to society.

[marybourg]

2. The 1% don't want any more Baracks

Or Michelles competing with their kids. They're putting a good education further & further out of the reach of the working class.

[cyglet]

3. I'm kind of convinced

no one will own homes in that age group. It's bothered me for a long time. The jobs they get have no hint of stability, either, so even if they've paid down student loans and saved a down payment, will they even take the risk?

It's not an enviable position, that's for sure.

[orpupilofnature57]

4. The island of desolation , is over populated.

Thats the main goal of the 1% ,and their soldiers are rewarded ,so their kids can.Who are they?

[abelenkpe]

5. We chose college (grad school)

Have been paying steadily on our loans since 94. They will be gone soon. We have two young children and live in a tiny rent controlled apartment. We make enough to send them to a good school and hope to make enough to pay for their education so they don't have the same burden.

[elleng]

6. No surprise, and as it should be, imo.

Want a college degree? Think it will help you in future, career-wise? GET IT, and buy a house LATER, AFTER you're out of college.

(Not that I'm a saint, but I/we bought our house 15 years after graduating from law school, and never expected to go directly from school into house. This is the way lives and the economy should work, in stages.)

[JDPriestly]

13. We bought a house in our 20s and had to sell it.

We didn't buy a house that we could keep until we were in our 40s. And we are both retired now. So, it's been like this for some of us for a long time. I think it is worse for the young generation now in their 20s and 30s.

But you can still buy a house. You may have to wait like we did until you are in your 40s. It makes it more difficult to save for retirement because you are trying to pay off your house at a time when you should be saving more for retirement.

[FarCenter]

7. If the degree will increase your employability and earning power, it may be worth borrowing for

If it won't, then you are simply choosing to indulge in conspicous consumption instead of investment.

[Ed Suspicious]

11. Liberal Arts education is dead. Tech school for all! n/t

[FarCenter]

14. Liberal Arts education has always been "finishing school for the upper middle class"

Or a preparation for taking a professional degree in medicine or law.

Normally the liberal arts graduate would either:
- make a good marriage to an eligible classmate (if female), or
- enter the family business or secure a position through family connections (if male).

[boppers]

8. Who wants to gamble on such an unstable "investment"?

"Buying" (mortgaging) property is gambling, just like putting money in the stock market, with no certainty of ever seeing a return.

There's also a generational shift in mobility... if you're just moving every few years anyways, buying a house in one fixed location can really screw up your future career opportunities, tying you down.

[FarCenter]

15. Buying a house is highly leveraged and has a high transaction cost

Suppose you buy a house for $200,000 with $40,000 down and a $160,000 mortgage.

The next day, you sell it for $200,000.

It will cost you about $16,000 in realtor fees and closing expenses to do the sale.

So you have immediately lost 40% of your down payment, and now have $24,000 left. Which is too little to buy another similar house.

This is why buying a house immobilizes people and prevents them from pursuing career opportunities that require a move.

[OneTenthofOnePercent]

9. My wife and my student loan payments total more than our mortgate payment.

We used FHA to qualify for our home with very little down payment.
We refinanced in the past year to lower our rates too.

[iris27]

12. Ours are close. They're definitely the biggest non-mortgage expense we have. n/t

[valerief]

10. I think in civilized countries you can have both AND socialized medicine! nt