Debt Makes This Impossible

Average Student’s Debt Makes Homeownership An Impossibility

Student debt is now at $1.4 trillion, so the chances of the average 20-something buying a home are pretty slim. It’s starting to seem like you shouldn’t go to school or go into debt at all. Actually, why not take out another loan?

Average Student Debt Makes Homeownership An Impossibility

Most Americans who have graduated from college or university aren’t in a position to buy a house on account of massive debt. Is there any wonder why North Americans in their twenties and thirties are not buying homes nearly as much as they used to?

Homeownership and Student Debt

These days, a 25-year-old is more likely to be living with their parents or with roommates. Currently, the student loan debt is sitting at $1.4 trillion, which is now bigger than the total credit card debt. What makes it worse, is that neither of these figures are even close to the housing debt.

The total mortgage debt is up to $15 trillion.

Housing Rates Are High And Wages Are Low

Most people in their twenties and thirties are living in cities where the housing rates are so high that they can barely afford to rent. It’s a problem compounded by the fact wages have barely kept up with inflation.

A report published by the Federal Reserve Bank of New York last year attributed student debt to the fact that millennials and others aren’t buying homes at all. Surprise, surprise.

And according to Wilbert Van Der Klaauw, who spoke with the New York Times, had student debt levels been the same as they were back in 2001, around 360,000 people in that age bracket would’ve bought a house. Or rather, they at least would’ve had the option.

It’s A Common Story Isn’t It?

It’s a common a story. The one about a girl/boy, whose name doesn’t matter. It’s all about how kids are going off to study their “passion,” and paying $40,000 for it.

They finish up their degree, leave, and there aren’t any jobs waiting for them in their highly specialized and barely lucrative field.

And rather than being frugal and pragmatic, their next option might be to buy a Hyundai Accent and pay it off in six years for the sake of “improving” their credit.

It Doesn’t Make Sense

That sort of thing is completely mind-boggling. Rather than working more hours, saving money, maybe living at home, and living a general frugal lifestyle, she bought a car while owing the bank $60,000 in student loans.

It seems like people are having a tough time accepting the fact that debt is slavery. Slavery is debt. People in their 70’s, for example, had parents who told them all about how bad debt is, and how you should never go into it.

Yet, once again, history repeats itself, and people are finding themselves in the debt-trap. But perhaps the worst part about it is the fact that publications like the New York Times don’t point out the ridiculousness of such a problem.

Older People Know That Debt Is Bad

Buying a $30,000 car when you already owe the bank $60,000 isn’t a great idea.

Older People Know About Debt

Moreover, in the typical story, the girl might go on to talk about how she and her boyfriend live in an apartment that costs around $1,350 a month. And they’re thinking about getting married, obviously.

And what will the bill for that be? Probably around $20,000.

Might as well get another loan.

Even though for a good number of people, going to college is a bad idea, for some it’s still good when it comes to owning a home. Half of the people who went to college own a home by the time they’re 33-years-old. These kids are probably the ones whose parents helped pay off the bill. 

If You Can, Avoid Debt

However, the New York Fed doesn’t reveal how much debt those people are in either. It gets worse when you look into how much people are changing their mind while in school. A student might change universities twice, take out more loans, change majors, and then finally get a masters in history.

And what is the debt for that? $300,000.

And rather than getting a forty-hour-a-week job to pay it all off, you can paint yourself white and stand like a statue in the middle of the town square while people give you money.

What do you think about the debt problem? Let us know in the comment section.

image sources

  • Homeownership and Student Debt: NewYorkTimes.com
  • Older People Know About Debt: Ataraxik

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