Huh? Why would it make people poorer? If you take a $100,000 loan and then give the $100,000 to me, I'll be $100,000 richer. That is $100,000 more than I can spend on a house.
A college brings more indirection than you simply handing me $100,000, but the essence is the same. Were you under the impression that colleges burn the money?
The student is giving up the future money they would have otherwise used to buy a home in order to give it to me, sure, but we already know that. That was established in the comment about Michigan. Did you forget to the read the entire thread, or something?
If so, it's an interesting hypothesis, but there's a few questions like a) why did it only start to occur in the last decade or so when student loans have been increasing for decades, b) why does this specifically impact housing prices and not other CPI items, and c) has there been any empirical data to actually show this relationship?
I'm saying taking on debt comes with the assumption that you can create new value, over and above the debt value, in the future. Normally, lenders require a promise of value you have already created (security) to fall back on if you fail to create that future value in order to keep things in check. Not so for student loans, though. They are assumable by those who haven't created any value in the past, and who may struggle to create new value in the future. This creates a distortion in the economy.
> why did it only start to occur in the last decade or so
Why do you say that? As far as I can see it started in and around the 1950s and really started accelerating in the 1970s. Before that housing prices were almost perfectly stagnant.
> why does this specifically impact housing prices and not other CPI items
Mostly a function of what else are you going to buy? I wouldn't say housing is the only place that has attracted money (remember Bitcoin?), but may be the most notable.
If everyone saw a share of the money then you might find competition in buying things like bread, but if it is only the top 10% (for the sake of illustration) taking the proceeds, there isn't much pressure for them to pay more for bread. Only for the things the other people in the "top 10%" want to compete for.
I don't think we disagree on this. Students, by the nature of generally have no/limited assets, are able to get loans because they are backed by the government.
>As far as I can see it started in and around the 1950s
It took on a completely different character in recent decades, though. Changes in regulation and private loans have changed the rate of debt.
>Mostly a function of what else are you going to buy?
Forgive me if I'm putting words in your mouth, but it seems like you're saying money flows to education administrators and they disproportionately invest in housing. I'd need to see some data backing that up before I draw a stronger conclusion on it, otherwise it's just a neat and untested hypothesis. And you would expect other administrator-preferred asset classes to follow suit. If your stance is that money goes into the economy as a whole, I would expect a range of products to track with student loan increases, but I'm not sure the data backs that up either.
Because people buying something means they no longer have the money, and are thus, poorer. If you have $20, and you buy lunch for $10, you now are $10 poorer.
> Were you under the impression that colleges burn the money?
(looking around at my alma mater, which has tripled the size of administration and built like four new sports stadiums, while the wages of professors have remained flat for ten years and cost-per-credit-hour has tripled) -- um, yes? Are there colleges that don't just burn the money, or dump it into stocks/bonds/trusts/etc?
How does you, hypothetically, paying me $100,000 to teach you how to weave baskets under water make me poorer? By my math I gained $100,000. $100,000 more I now have to spend on a house that I wouldn't have had otherwise.
> Are there colleges that don't just burn the money?
Presumably all of them. At very least they pass a large portion of that money off to administrators, who then often buy houses with the money.
I don't follow. If college administrators were driving the price of housing, my point would fall apart immediately. That was in response to someone who thought colleges burn money, not the greater topic at hand.
> you're not going to convince many of us
Okay...? Why would I want to convince anyone of anything? That doesn't make any sense.