Use 'student loans' to fix the housing problem?

Norman_Castle

GreatApe wrote: »

60% of the students that take loans default on them

The student loan system will be set up to take this in to account. Higher education was previously state funded. It is now part funded by those with an ability to pay.

If your apparently worthless degrees are so worthless then lets stop funding them.

GreatApe

Norman_Castle wrote: »

If your apparently worthless degrees are so worthless then lets stop funding them.

A lot easier said than done

My proposal would achieve a big cut in worthless degrees and replace it with housing for young adults. What is your proposal in decreasing student numbers towards 10% of kids that you think could be passed into law without losing public support?

mrginge

Out,_Vile_Jelly wrote: »

I thought there wasn't a "housing problem" as everyone can either buy a house in Stoke for 50p or is guaranteed to inherit a six figure sum?

Hey don’t forget that we have full employment as well, so not only can everyone afford a house but even all those doing the ‘worthless’ degrees manage to get a job afterwards too.

Given that everything is fantastic for everyone in cells’... sorry I meant greatape’s world, one wonders why he/she/it is so desperate to rock the boat.

Perhaps cells, oh did it again can give us their list of worthless degrees. We know that photography and lumberjack-ing are on there, I wonder what else...

Windofchange

GreatApe wrote: »

With housing this will be much closer to 0%

And you know this how? Look at the sub prime crisis of risky loans that brought down the world 10 years ago. You reckon a load of students / Juveniles is going to be markedly better than this?

GreatApe

mrginge wrote: »

Hey don’t forget that we have full employment as well, so not only can everyone afford a house but even all those doing the ‘worthless’ degrees manage to get a job afterwards too.

Given that everything is fantastic for everyone in cells’... sorry I meant greatape’s world, one wonders why he/she/it is so desperate to rock the boat.

Perhaps cells, oh did it again can give us their list of worthless degrees. We know that photography and lumberjack-ing are on there, I wonder what else...

Well yes all things considered we have it very good in this country.
Full employment high wages and lots of wealth and freedom

So I am not drying or desperate to improve the university and housing situation.
However it would be a positive step to allocate less capital to university education and more capital to owner occupation

GreatApe

Windofchange wrote: »

And you know this how? Look at the sub prime crisis of risky loans that brought down the world 10 years ago. You reckon a load of students / Juveniles is going to be markedly better than this?

It didn't bring down the world and while people like you were running around like headless chickens I was buying undervalued housing and shares and posting on forums that the recession was temporary and actual wealth had not been destroyed.

As for defaults we don't need zero defaults we just need less defaults than the 60% of students defaulting on their loans. Also its mostly none of your business this debt will be sold into the private market just as the student loan books are sold into the private market (but with the student loans we are possibly only getting 60p to the pound on a NPV basis).

So the real test is to see what the market will pay for a loan book covered against housing and against income payment of say 15% of income over £5,000 earnings.

To compare 30 year index linked gilts are yielding NEGATIVE 1.6%
If these could be issued for 0% index linked then its a zero cost proposition
That means £10 billion of the loan book could be sold for £10 billion

It might even be acceptable to sell £10 billion of the loan book for £9 billion.
The government then makes a 10% loss on the loans directly, which is less than the 60% defaulting in current student loans so its still a saving over the kids doing media studies etc degrees.

There are also many subsequent savings for the government eg it saves itself from paying 60 years of housing benefits for some of the young adults. The young adults start work sooner so start paying taxes sooner. Etc

mrginge

GreatApe wrote: »

This idea saves many many billions it doesn't cost us

And yet no other great mind from any school of economics has come up with this mind blowingly simple plan.

Can you offer any suggestion as to why that is?

GreatApe

mrginge wrote: »

And yet no other great mind from any school of economics has come up with this mind blowingly simple plan.

Can you offer any suggestion as to why that is?

Well there are two possibilities

One is that I am a lot smarter than the average person in the media/government and have spent a good amount of time thinking about housing

The other is that I have come up with a stupid idea but have not realised what is stupid about it.

I accept the second is a possibility which is why I have posted it here for others to think it through and spot the errors or confirmation biases I may have on this proposal. So far none of you have posted anything which seems to break the idea. Contrary to what you likely think, I would be very happy for someone to post something which makes me think OK great that's a part of the idea I didn't think of and it totally destroys it in a fundamental way.

GreatApe

It's something I will probably offer my children when they hit 18
Offer to pay for their university education and maintiance which will cost about £60k or offer them the same £60k towards a house or towards a pension. Having the options is much better than having only the option of money towards an education. With only the education option they are much more likely to make sub optimal decisions.

economic

GreatApe wrote: »

Well there are two possibilities

One is that I am a lot smarter than the average person in the media/government and have spent a good amount of time thinking about housing

The other is that I have come up with a stupid idea but have not realised what is stupid about it.

I accept the second is a possibility which is why I have posted it here for others to think it through and spot the errors or confirmation biases I may have on this proposal. So far none of you have posted anything which seems to break the idea. Contrary to what you likely think, I would be very happy for someone to post something which makes me think OK great that's a part of the idea I didn't think of and it totally destroys it in a fundamental way.

i am not convinced about your idea not creating a large demand for housing (and there would cause house prices to rise further). The £60k would probably effect outside the SE much more then London given the price differences.

I see your intentions about reducing the education bubble that clearly exists in this country. but why not just stop funding for all the useless degrees and universities? that way if someone really wanted to do dance at middlesex uni then they will have to fund it themselves not the taxpayer. whereas something that would be productive for the economy can be funded by the taxpayer initially.

and no need for any funding scheme options for housing or pension. as you said we don't have an affordable issue in this country so why tamper with it? why not let the 18year old start work after alevel on an apprentice and start building a "career" and savings from then?

plus to administer such a scheme would be quite complex and costly (in order to prevent fraudulent use of money, property etc.)