Home costs, maybe.* Education would work differently. Without taxpayer-backed student loans you’d see a lot of lower-tier private schools close up shop, similar to how for-profit operations like ITT did when the federal student loan gravy train was cut off for them.
The remaining private schools would maintain their high costs, due to greater demand caused by the reduced pool of schools. The only students able to afford them without taxpayer-guaranteed loans would be the children of already affluent families.
Public colleges and universities would reduce some costs in that scenario, but not to a huge degree (labour costs remain the largest line item at any school, private or public, and they’re all competing for the same people). Also, acceptance rates would shrink further at public institutions (without caps on family income for applicants, mind you – wealthy people like a bargain, too).
You’d basically have a return to the status quo ante the G.I. Bill in terms of access to post-secondary education but in a post-industrial economy, without significant cost decreases.
[* it’s more likely that developers will want your average homebuyer to pay close to the same amount for a smaller square footage]
Yeah, that’s always struck me as madness. Food and housing are both basic costs, and housing is usually first - people go hungry/get food from food banks when rent and other basic expenses leave no money left over. It becomes really mad when you live in an area as I do where one can have an income over the poverty line yet it would take at least 80% of that income to rent the most basic housing in the cheapest part of the region - the idea that 40% of income goes to rent + utilities is totally laughable.
That started with the GI Bill. Before then, the down payment to own property was 70-90%, so very few people could own their own home. The federal government agreed to underwrite the mortgages, so the banks were willing to loan on substantially less down payments. Same with education loans.
So really, the fault lies with the fact that once upon a time we actually valued and supported our (white) veterans in real ways, not just in lip service.
The unstated end-game of Libertarians is to return us to the Gilded Age economic baseline, where home ownership and access to higher education are only available for wealthy people.
Back in the '60s and '70s, there were no liar loans or mortgage tranches, and buyers needed 15% or more skin in the game. Homeownership rates were in the mid 60 percent range.
I’d take a return to that scenario, with pleasure.
This puts the wicked witch of Hansel and Gretel into a different perspective for me, in which she was not necessarily evil, but simply making sound economic decisions for housing and food.
Easy enough to return to that scenario: erect a new version of the Glass-Steagall regulatory wall and that will be the end of NINJA loans and the mortgage-backed securities that made them possible.
I suspect that the inflation adjusted cost per student enrolled, as well as the ratio of non-teaching to teaching personnel, has gone up substantially in the last three decades. There should be room to squeeze a good deal of cost there.
Certainly the current model of loan more, borrow more, pay more, has done nothing to encourage colleges to operate more efficiently.
I’m confused. You were originally arguing for making home ownership more attainable. The data shows that it’s less attainable under the system (or lack thereof) you seem to be supporting.
I’d rather see people owning homes they can afford (total borrowing no more than 3x income) and buying them with a 20 percent down payment. If that means home “ownership” drops a few percentage points, it’s worth it.
Not as much as you’d think. Again, labour costs are the biggest line item at any school. They’re already squeezing their costs with the part-time adjunct system and academia is already a buyer’s market for instructors thanks to a relative glut of PhDs. Meanwhile, non-teaching senior administrators who are entrenched make sure that their kind are the last to go when it’s time to cut costs.
It’s encouraged some colleges (mostly private non-endowed, but some public) to pile more money into sports programmes, luxury student amenities, and fundraising administrative positions – all at the expense of funding for instruction and research. But that’s more a question of misplaced priorities than it is of the source of funds.
Let’s be clear: those few are only present in one duopoly party and on one end of the economic political spectrum.
I wish more so-called conservatives shared it over the past 40 years. You only get more “fancy stocks” and “bogus schemes” and speculative bubbles when you continue to worship at St Ronnie’s altar of constant deregulation.
A 15-20% down payment is fine. 10% would do, too. The problem here is that developers have demonstrated they won’t build such new affordable housing stock, whatever the square footage and whatever government-backed loans are available or not. You already see the trend with “micro condos” and “tiny houses” of less than 300sqf in major and desirable urban areas going for a minimum $250k (which, under your scenario, would mean an annual income of $75-80k).
That’s okay. The affordable housing stock doesn’t have to be new. In fact, in the absence of zoning laws requiring a certain number of “affordable” houses it usually isn’t. Houses should be durable, and there’s no reason to expect the working poor to be able to afford a new house any more than a new car. BUT there should be reasonably priced housing available across income levels.
The price of new stock tends to adjust the price of old stock as well, usually way beyond the rate of inflation. That means that under his scheme someone will still have to make a minimum $65-70k to own a tiny old-stock home.
There’s no reason for anyone who understands the current economic realities to expect the working poor to be available to afford to own a home. But there are plenty of Americans making $52k a year who do expect to attain that “American Dream” based on an economic model that’s not only been petering out but that has been under active assault from the right wing since 1980.
Those deluded middle-income Americans who want to “MAGA” aren’t going to settle for owning a 300sqf condo. They’re already angry, and expressed it by electing a plutocrat President who’s going to double down on some bad policy, reverse precipitiously on others, and make things even worse.
I strongly suspect that most us would greatly object to either the educational experience or the housing quality that would be available in 1940’s and 50’s. How many were housed in firetrap boarding houses? How many had to drop out because of physical or mental challenges that now have at least some sort of support?
When we bemoan increased prices, let’s be aware that a moderate amount of the increase is due to increasing safety standards, codes, student support, etc., that would simply be unthinkable for earlier generations because almost no-one could afford them.
Of course, housing is also influenced by the fact that people want to live in or near cities and we’re trying to pack more people per city. And trying to pack more people in the same space automatically means higher prices. It’s pretty hard to repeal supply/demand.
