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College Loans Make Family Formation Less Affordable
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I coined the term “affordable family formation” a decade ago to suggest to Republican strategists a coherent plan for long term survival.

From the Financial Times:

The growth of US student loan debt: causes and consequences
Cardiff Garcia Author alerts | Jun 10 09:29 |

…Wenli Li of the Philadelphia Fed emphasizes ….

Additionally, Dora Gicheva suggests that each $10,000 in additional student debt decreases the borrower’s long-term probability of marriage by 7 percentage points. A 2010 poll found that 85 percent of college graduates were planning to move back home after graduation. (Dickler 2010). The high unemployment rates and low income of new graduates are the leading causes behind these survey results. But having large student loans can certainly make things worse.

And from Brookings:

Dew (2008) finds a negative correlation between reduced marital satisfaction and student loan debt, positing that increased stress related to consumer debt—including student loans—could diminish marital satisfaction. About 14 percent of borrowers surveyed in 2002 reported delaying marriage due to student loan debt, up from 9 percent 15 years earlier. Over the same period, the share of borrowers who reported that they delayed having children due to student loans jumped from 12 percent to 21 percent (Baum and O’Malley 2003).

The current system is a machine for creating Democratic voters. But Republican politicians have been bought off by its semi-privatized nature, which creates a lot of for-profit opportunities for firms employing Republican lobbyists. The solution is perhaps to let the Democrats de-privatize the system, and then the Republicans can oppose it on general principles.

 
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  1. Anonymous says: • Disclaimer

    As it is now, colleges ramp up tuition on the belief that student loans will always cover it – that students can always take out more to pay for their splurging. In short, there is zero incentive for cost control. Due to this belief, the University that I attended looked more like a resort than a school, with new rec centers, dorm complexes that you could mistake for palaces, continual construction of ever more opulent facilities and Greek buildings, food courts, etc. It felt like a business, one dedicated to gaining more clients by building newer and greater attractions for them. In this way, colleges compete with each other and drive up tuition in the process. Whomever has the greatest attractions has the greatest customer base.

    If the GOP could work on controlling the cost aspect, that might be a start – perhaps taxing Universities based upon their expenditures (or cost of attendance, tuition rate, etc.), with a higher rate for greater expenditure. If they were forced to skimp somewhere in order to pay the tax bill, then they might chose to eliminate building the new recreation center or food court, keeping tuition under control.

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  2. The high unemployment rates and low income of new graduates are the leading causes behind these survey results.

    And fifty years of uncontrolled, excessive, legal and illegal immigration is the leading cause of the high unemployment and low income of new graduates.

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  3. SFG says:

    Why on earth would they do that? You just elegantly stated how both parties benefit from this state of affairs.

    All great f***ups are bipartisan, and this strikes me as one of those.

    Personally I’d raise awareness about how ‘everyone goes to college’ just leaves everyone at the same place, but further in debt. It’s obvious even with an 85 IQ if you think about it–if everyone goes to college, but the same jobs have to be done…

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  4. I keep wondering which straw will break the back of the US economy. There are a number, and I don’t expect to survive another decade, but student loans are a definite contender. Obama is going to cap the amount a borrower is required to pay at 10 percent of income, and the maximum amount of time they will have to make payments on their debt will be 20 years. I heard a show on NPR today about this subject. A young woman called in who owes $250,00o in loans she took out to get a master’s degree in psychology. She doesn’t have a decent job and can pay back only a nominal amount, so the taxpayer will ultimately be responsible.

    If the taxpayer is going to be responsible for debts of this kind, don’t we have the right to refuse loans to people who obviously aren’t going to be able to repay them? People getting degrees in areas where high-paying jobs are not available? It would make more sense to make colleges eat the losses of students who can’t pay back loans based on the market value of their degrees. They need to bear some of the moral hazard. That might put an end to all the race and gender studies departments.

    Also, I really hate the way Obama keeps pushing college on everyone.

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  5. Anon says: • Disclaimer

    I coined the term “affordable family formation” a decade ago to suggest to Republican strategists a coherent plan for long term survival.

    You’re assuming that the leaders of the Republican party actually care about the long-term survival of the Republican party. What if they don’t? What if they’re only interested in milking it for their own profit by catering to the globalist oligarchs and don’t give a damn about whether or not the GOP exists 50 years from now?

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  6. countenance says: • Website

    More affordable family formation Sailerbait:

    http://taxprof.typepad.com/taxprof_blog/2014/06/blue-state-policies.html

    A genuine affordable family formation agenda is going to have to do something about the higher education bubble. Some of the indispensable line items are pushing back on credential creep aka diploma creep, repudiating the legal doctrine of disparate impact so that testing instead of expensive diplomas are the main filtering mechanisms for employment, repudiating Griggs vs Duke Power, (which the Supreme Court actually did, but the Civil Rights Act of 1990 reimplemented legislatively), making in-state tuition for public colleges and universities free of charge, (I understand that the University of California system didn’t even charge tuition for in-staters until some point in Reagan’s first term as Governor).

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  7. Hepp says:

    OT, but Cantor lost! This is the best thing that’s happened in a while.

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  8. guest007 says:

    As long as there are more people applying for jobs than there are jobs, creeping credentialism will exist and the fight for places in the tier one schools and the good paying jobs will continue. There is no government policy that is going to create high paying, low work jobs for the middle class. There is no policy that will make international competition go away. And since there will be fewer good jobs, there will be fewer children born to the middle and upper middle classes. This is especially true for whites and Asians.

    The idea that the government can affect these demographic trends is wrong. All the government can go is adopt policies now that limit the negative impacts of the trends.

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  9. Anonymous says: • Disclaimer

    Our plan to ensure that no Americans below the 1% (who by the way vote 99% Democrat) are able to earn any money whatsoever suffered a huge blow tonight with the defeat of Cantor.

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  10. outsider says:

    No doubt the Republicans have only the country’s purest interests at heart, completely unlike the Nigerian oil kleptocrats or Russian oligarchs or every corrupt government ever.

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  11. Whiskey says: • Website

    Tariffs, quotas, made in America content, and massive 1960s NASA and military spending would benefit the stem friendly White middle class nicely. NAM spending would have to be slashed however. So yes it can be done. Make Apple manufacture their stuff here if the want to sell it here.

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  12. Anonymous says: • Disclaimer

    “Dew (2008) finds a negative correlation between reduced marital satisfaction and student loan debt, positing that increased stress related to consumer debt—including student loans—could diminish marital satisfaction.”

    Isn’t reduced marital satisfaction the same as marital dissatisfaction?
    So
    shouldn’t it be a negative correlation between student loan debt & marital satisfaction (i.e. as debt goes up marital satisfaction goes down)
    OR
    a positive correlation between student loan debt and marital dissatisfaction (as debt goes up, marital dissatisfaction goes up.)

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  13. My first semester at college was in the Fall of 1982 at SUNY Farmingdale, a commuter school. My tuition for the semester was about $550, not including books. I paid for it out of the money I got paid the previous summer, working at a beach doing cleanup and maintenance for minimum wage.

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  14. Anon says: • Disclaimer

    The other impact of high tuition on family formation is that it discourages upper and middle class families from having more children. College tuition is the ultimate progressive tax.

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  15. Obama is going to cap the amount a borrower is required to pay at 10 percent of income, and the maximum amount of time they will have to make payments on their debt will be 20 years.

    What? He’s not a dictator. How is he going to do this?

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  16. AnAnon says:

    Universities have monopoly pricing power on signalling, and that is only going to go away, as countenance posted, when disparate impact is gone.

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  17. CJ says:

    “If the GOP could work on controlling the cost aspect, that might be a start – perhaps taxing Universities based upon their expenditures (or cost of attendance, tuition rate, etc.), with a higher rate for greater expenditure. ”

    Price controls would do the trick. The usual objection to price control is that it leads to undersupply, but since too many people are going to college already this would be a feature, not a bug.

    Universities are largely controlled by liberals. It is best if they have as little excess money as possible, because that excess just gets funelled to leftist projects (women’s studies, diversity directors, etc.) Set tuition at a max of $10k a year, or whatever is just enough to cover instruction in core subjects.

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  18. CJ says:

    “A young woman called in who owes $250,00o in loans she took out to get a master’s degree in psychology. She doesn’t have a decent job and can pay back only a nominal amount, so the taxpayer will ultimately be responsible.

    If the taxpayer is going to be responsible for debts of this kind, don’t we have the right to refuse loans to people who obviously aren’t going to be able to repay them?”

    Price controls would solve this problem too.

    Just say that any college that wants to receive federal financial aid has to cap tuition for aid receiving students at $10k. They could still charge the rich whatever they want.

    It would be a way of out-lefting the left, but in a way that advances conservative interests.

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  19. eah says:

    Not to mention it just seems immoral to burden young people with lots of debt.

    But it’s also fundamentally wrong for the US, a sovereign nation with its own currency, ie it should be able to issue as much of said currency as it wants, to run deficits by issuing debt that also burdens future generations.

    But both are happening with abandon. Go figure.

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  20. Anonymous says: • Disclaimer

    What? He’s not a dictator. How is he going to do this?

    Pretty much a done deal. See:

    Student-Debt Forgiveness Plans Skyrocket, Raising Fears Over Costs, Higher Tuition
    By Josh Mitchell
    April 22, 2014

    http://online.wsj.com/news/articles/SB10001424052702303887804579503894256072308

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  21. David M. says:

    “Personally I’d raise awareness about how ‘everyone goes to college’ just leaves everyone at the same place, but further in debt. It’s obvious even with an 85 IQ if you think about it–if everyone goes to college, but the same jobs have to be done…”

    What, what, what? The same jobs have to be done? But if everyone goes to college, everyone will use that rigorous education to become a future builder. And if everyone is a future builder, everyone will soon be employed in socially aware, social media-driven green energy enterprises that will help create an America that lives up to the promise of its founders.

    We just need to get that last 40% of American youth in college for 5-8 years so they too can invest in their future. And of course it would help if we could get all those dreamers in Latin America into U.S. colleges so they too can build our future.

    In my opinion the best way to do this is to load up every young American with more government-guaranteed debt, and figure out complex, bureaucratic ways for them to avoid ever having to pay it. This way everyone wins – the future is built, every young American (and Latin American) gets to go to college, no one is weighed down by debt they actually have to pay, banks make more money, bureaucrats are employed administering an increasingly byzantine and larger debt program, college campuses finally give students the level of comfort and luxury they deserve, and multitudes are employed educating marginal students in the same things they learned in high school, except at higher salaries and with opportunities to move into interesting positions such as diversity officer and campus feng shui advisor. You see everyone wins!

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  22. Peterike says:

    Wow, policies that further decimate the white middle class. What does that sound like? Oh yeah, every Democrat policy ever. Shouldn’t the core assumption here be that everything is going as planned?

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  23. Corvinus says:

    “The current system is a machine for creating Democratic voters.”

    Not quite. The banksters generally skew Republican. They are simply meeting the demands of consumers. They are taking the liberty to issue those loans; those who want them make their own decision.

    There is no “immorality” here. Just simply good ol’fashioned American capitalism.

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  24. The system already was de-privatized for all new loans in 2010: “Following the passage of the Health Care and Education Reconciliation Act of 2010 on March 26, 2010 the program was eliminated, and no subsequent loans were permitted to be made under the program after June 30, 2010.” (per Wikipedia)

    People are mad about their student loans without knowing a lot about who they are supposed to be mad at. That’s good for Democrats.

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  25. […] SAILER: College loans make family formation less affordable. “The current system is a machine for creating Democratic voters. But Republican politicians […]

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  26. peterike says:

    Not quite. The banksters generally skew Republican.

    Sure they do.

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  27. WhatEvvs [AKA "Cookies"] says:

    Somewhat more off-topic, 538.com has a surprisingly fair assessment of Scalia’s dissent on Windsor:

    http://fivethirtyeight.com/datalab/latest-same-sex-marriage-rulings-prove-that-scalia-was-right/

    Of course, they are gloating that he was dissenting and are happy that SSM will be the law of the land due to this ghastly ruling.

    I wonder why you don’t write more about the changes in family law in California, specifically this bill:

    http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140SB274

    It will have profound implications for family formation in the future, great downstream effects.

    This is all very Heinleinian. In 100 years, Scalia will be elevated to the status of either the greatest devil ever, or a prophet.

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