The Next Bailout

If I seem a bit obsessed with student loan debt, it could be because of the ages of my children -- financing college is a big topic in our house. Discussions about "name" schools vs. affordable schools occur frequently--almost daily these days with a high school senior in the house. Last week I blogged about my concerns about what the levels of student loan debt would do to the economy several years out-- but it appears that it may exacerbate the current crisis, as well.

The New York Times has an article this morning, discussing the job prospects of graduates from top business schools. They mention one student who expects to graduate with $200,000 in debt. Think about that--$200,000--generally repayable over a 10 year period, at a 6-7% interest rate...with payments starting shortly after graduation.

How many of these kids are there? And without jobs, how will they pay these loans? And will taxpayers whose children have made trade-offs so they don't need to assume the level of debt required by a big-name school be expected to bear the burden of loan forgiveness for these bad choices?

We live in scary times, I think.

Who Will Buy the Boomers' Houses?

During the debate at the University of Mississippi last Thursday, John McCain said, "This isn't the beginning of the end of financial crisis, this is the end of the beginning." The comment itself didn't spark controversy, and the candidates moved on to other topics, but it resonated with me.

I see another perfect storm brewing in a few years. At some point, the baby boomers will begin attempting to sell their houses -- whether because of infirmity, the desire to simplify or the need for cash. Whatever the reason, a fair number of four bedroom colonials will hit the market.

At the same time, college tuitions are spiraling out of control, with more students graduating with large amounts of student debt. When they marry, they'll combine two student loan portfolios. For many of them, the level of debt they've assumed will preclude a house purchase.

So who will buy all the baby boomers' houses?