Use 'student loans' to fix the housing problem?

Malthusian

Just to provide balance, I think this is a genius idea.

The numbers may need some work but you could pay 100 think tank jockeys an enormous sum of money to write a 2,000 page report and work out how much should be on offer, and it would be no better or worse than GreatApe's figure.

Sure, it would have unforeseen consequences on the housing market. Who cares. Move fast and break stuff. Whatever the unforeseen consequences are, it would be worth it to save thousands of young people from wasting three years of their short lives studying useless degrees at third-rate polys and being lumbered with the shame and the stigma of a debt they will never pay back.

The only people who could possibly object to expanding the student loans scheme to non-university-goers are lecturers at third-rate polys who fear the end of the gravy train and having to get a job in Argos.

The notion that house prices would rise by £60,000 because people have £60,000 more to spend is nonsense. It's a loan. House prices don't go up just because people can borrow more money, otherwise there would have been an absolute cataclysm after the credit crunch happened and the amount of money people could borrow dropped by more than half, with the end of 125% LTV mortgages and affordability restricted to 4.5 times salary if you're lucky. Rather than the mere correction that did happen.

Windofchange

GreatApe wrote: »

How can they default the repayments are taken directly from their pay packets via hmrc as is the case for the current student loans and the koan is also secured on the Property.

Repayment would be very close to 100% just in the same way that repayments for normal mortgages are close to 100% housing loans are so low risk that my bank lends to me at 1% nominal which is currently negative 2% in real terms

So you're saying in one breath that the student loan default rate is 60%, then in the next you're saying that because someone now can get a loan for a house instead that this wouldn't be 60%? You've solved defaulting on student loans by letting people buy a house?

You also seem to have missed out the whole needing a mortgage thing. Whatever you are giving these people (30k, 32k or 60k - I'm lost now) the vast majority are going to need to borrow money. So you want to dish out sub-prime loans basically as per my previous post as most teenagers and youngsters won't pass affordability checks. You want to allow someone earning a grand a month to take on a liability such as a house / flat? As per my previous post, this all went horribly wrong 10 years ago with mass defaults in the subprime market. We have indeed already tested a version of your great idea and it brought about a global financial crisis.

Adding in that you can get a 1% loan and isn't life wonderful yet again doesn't prove any of your points. That is your n=1, not n = 700,000 18 year olds.

chucknorris

Malthusian wrote: »

The only people who could possibly object to expanding the student loans scheme to non-university-goers are lecturers at third-rate polys who fear the end of the gravy train and having to get a job in Argos.

Oh I just have to respond to this, to explain I am a lecturer, possibly at a university that you would class as third rate (I'll get back to that).

Well your first problem is that I am a multi-millionaire, so why would I want to work at Argos (way beyond bizarre).

It isn't a gravy train, I decided to continuing working this year, rather than retire, (actually I originally retired 17 years ago, aged 42, but at 52 I decided that I wanted to become a university lecturer) because I truly believe that I am putting something back into society. Although I will certainly try, I don't think that I will actually spend what I currently earn, I already have too much. I do it because I both like it, and more importantly I think that I am doing something worthwhile (although I really don't expect you to fully understand that).

Although our university isn't particularly (overall, across the board) highly rated, I believe that our department, and in particular the quantity surveying degree that I jointly deliver is very good. It is delivered mainly by 3 chartered quantity surveyors, who previously had very good careers in industry, certainly I did, I was (and still am) very respected for my ability when in industry.

GreatApe

Windofchange wrote: »

So you're saying in one breath that the student loan default rate is 60%, then in the next you're saying that because someone now can get a loan for a house instead that this wouldn't be 60%? You've solved defaulting on student loans by letting people buy a house?

Well yes this solves the defaults maybe not completely but by a huge amount
It does it by moving away the students who study crap into housing. So the 10-20% of the population who continue to go to university their repayments would jump because they are the students who would continue to go to go to oxford Cambridge etc and continue to do medicine etc that clearly pay back their loans.

The reason the housing default rates would also be extremely low is two fold. First you can have it on much better repayment terms. For example 10% repayment on earnings above £5k. That would see many more people pay off much more quickly their loans vs the current system of 9% above £21k

Also the loan would be secured on the property and apart from a few crazy people like crashy no one expects house prices to fall 100%. Even if the unimaginable happened and there was a 30% crash that lasted 70 years that would mean just one years worth of loans would suffer a writedown the other 69 years worth of loans would be fine. I know your trying really hard to imagine that most the housing loans will default but they won't. The inky way the housing loans would default would be if there was a continuous house prices crash for decades. So 10% off each and every year for 30 years. Not gona happen these loans would be secure and as I keep saying its not any of your businesses it will be sold onto the private sector

You also seem to have missed out the whole needing a mortgage thing. Whatever you are giving these people (30k, 32k or 60k - I'm lost now) the vast majority are going to need to borrow money. So you want to dish out sub-prime loans basically as per my previous post as most teenagers and youngsters won't pass affordability checks. You want to allow someone earning a grand a month to take on a liability such as a house / flat? As per my previous post, this all went horribly wrong 10 years ago with mass defaults in the subprime market. We have indeed already tested a version of your great idea and it brought about a global financial crisis.

What the hell are you talking about these were no mass defaults in the uk
Again you believe stupid house price crash cheerleaders people don't sell up or hand the keys back they need somewhere to live. 2008 was horrific as far as recessions go. But guess what not many defaults and ten years in the economy is booming again.

Adding in that you can get a 1% loan and isn't life wonderful yet again doesn't prove any of your points. That is your n=1, not n = 700,000 18 year olds.

You have some deep hated for young people buying homes because if they did it would show what a failure your owls over at hpc are. Thus is the reason you object

Too bad for you, even as things stand, some 75% of young Brits will and do become owners

GreatApe

chucknorris wrote: »

Oh I just have to respond to this, to explain I am a lecturer, possibly at a university that you would class as third rate (I'll get back to that).

Well your first problem is that I am a multi-millionaire, so why would I want to work at Argos (way beyond bizarre).

It isn't a gravy train, I decided to continuing working this year, rather than retire, (actually I originally retired 17 years ago, aged 42, but at 52 I decided that I wanted to become a university lecturer) because I truly believe that I am putting something back into society. Although I will certainly try, I don't think that I will actually spend what I currently earn, I already have too much. I do it because I both like it, and more importantly I think that I am doing something worthwhile (although I really don't expect you to fully understand that).

Although our university isn't particularly (overall, across the board) highly rated, I believe that our department, and in particular the quantity surveying degree that I jointly deliver is very good. It is delivered mainly by 3 chartered quantity surveyors, who previously had very good careers in industry, certainly I did, I was (and still am) very respected for my ability when in industry.

That's great its nice to see a lecturer who knows he adds value. I'm sure your department will stay and you will be happy introducing more competition for the student loans so the kids who really don't get much value from their chosen subjects/institutions can have better options

One thing I would like to see published is the student loans book repayment broken down by subject and institution. Its all good and well universities proudly proclaiming that 95% of their students are employed within 6 months but the parents and kids have no idea how good the quality of that employment is.

If the parents and students could see that media studies at Luton has an average loan repayment of £0 over the next 10 years of graduating maybe they would have a better idea of the value of the degree

GreatApe

Malthusian wrote: »

Just to provide balance, I think this is a genius idea.

The numbers may need some work but you could pay 100 think tank jockeys an enormous sum of money to write a 2,000 page report and work out how much should be on offer, and it would be no better or worse than GreatApe's figure.

Sure, it would have unforeseen consequences on the housing market. Who cares. Move fast and break stuff. Whatever the unforeseen consequences are, it would be worth it to save thousands of young people from wasting three years of their short lives studying useless degrees at third-rate polys and being lumbered with the shame and the stigma of a debt they will never pay back.

The only people who could possibly object to expanding the student loans scheme to non-university-goers are lecturers at third-rate polys who fear the end of the gravy train and having to get a job in Argos.

The notion that house prices would rise by £60,000 because people have £60,000 more to spend is nonsense. It's a loan. House prices don't go up just because people can borrow more money, otherwise there would have been an absolute cataclysm after the credit crunch happened and the amount of money people could borrow dropped by more than half, with the end of 125% LTV mortgages and affordability restricted to 4.5 times salary if you're lucky. Rather than the mere correction that did happen.

It should save a lot of money in other areas as well as reducing the lost resources and capital in sending kids to do degrees which add little to no value and they don't pay back their loans.

For instance housing benefit payments would tend lower and lower seeing as ownership would jump to over 95% for the young

You could scrap help to buy and the LISA (upto £32k for free)
You would save a lot in much fewer student numbers getting free council tax
You would get a lot more in income taxes as the students start working 3-4 years sooner
Toy would provably get more VAT and fuel duties and other taxes as the students spend their higher incomes

And yes the exact figures are not the critical part its the idea of offering young adults the ability to use their student loans for an education or housing. With choice there is more competitions and more options for the students to allocate the capital better than they do now.

chucknorris

GreatApe wrote: »

That's great its nice to see a lecturer who knows he adds value. I'm sure your department will stay and you will be happy introducing more competition for the student loans so the kids who really don't get much value from their chosen subjects/institutions can have better options

One thing I would like to see published is the student loans book repayment broken down by subject and institution. Its all good and well universities proudly proclaiming that 95% of their students are employed within 6 months but the parents and kids have no idea how good the quality of that employment is.

If the parents and students could see that media studies at Luton has an average loan repayment of £0 over the next 10 years of graduating maybe they would have a better idea of the value of the degree

I'm not going to be drawn into defending all the degrees offered by our university, I'm sure that there must be some 'dubious' ones. What got my goat, was the reference to 'third rate universities', and the implication that all the lecturers must also be so. That is ridiculous, both 'good' and 'bad' universities will offer sub -standard degrees, all lecturers should not be targeted, the ones that I know are very dedicated. our graduates tend to start on a salary over £28k (in London), that isn't a lot, I know, but it is a reasonable start.

GreatApe

chucknorris wrote: »

I'm not going to be drawn into defending all the degrees offered by our university, I'm sure that there must be some 'dubious' ones. What got my goat, was the reference to 'third rate universities', and the implication that all the lecturers must also be so. That is ridiculous, both 'good' and 'bad' universities will offer sub -standard degrees, all lecturers should not be targeted, the ones that I know are very dedicated. our graduates tend to start on a salary over £28k (in London), that isn't a lot, I know, but it is a reasonable start.

I feel you are perhaps too emotionally attached

Saying something is of little value is not necessarily attacking the honor of those providing that service. I think its reasonable to claim that a lot of degrees at a lot of universities offer little value from the fact that some 60% of the students gain so little value that they default on all or some of their loans. Saying the subject is useless is not the same as saying the person teaching the subject is useless.

With choice my guess is university attendance will more than halve. That means more than half the staff will be let go. However I would wager close to 100% of them will very rapidly get good work as they are smarter and more capable than the average person and we have an economy with full employment (the figures for unemployed more than 6 months is just 1.8% and some of those must be fake too people working but claiming at the same time)

Windofchange

I can't be bothered anymore. You've found one person who seems to agree with you amongst many others who think you need sectioning. If this was such a great idea, it would have been done by now. Do let us know what your local MP thinks.

GreatApe

Repayments for the housing loans could be made much higher much faster than the current student loans. For instance 25% of all earnings over £5k
At that rate someone earning £25k a year would clear the loan off in less than 14 years.

If we take two examples. A couple who opt for the house vs a couple who do media studies at Luton if they both earn the same £25k you have the housing couple at age 32 debt free and own a house outright. By comparison the media studies couple have a combined £180k in student loans still and are possibly still renting. The difference in their net wealth is £320,000 at that point. A huge incentive to not do degrees that add little to no value to your earnings.