No surprises there. Those of us who were here during the crash saw how swiftly parents went from “of course your kid deserves to attend the dream school, so just borrow from your home equity to pay for it” to “your kid can get a good education just about anywhere, so follow the money”.
I’d love to see an analysis by a data scientist and an economist and not a sociologist.
One could also posit that past a certain structural rate of college attendance (past 10 year average?), an increase in the number of kids who go to college come from families which are already experiencing financial instability, i.e. single parent households, recently divorced who have gone from supporting one household to two, parent who is incarcerated, recent immigrant, long term unemployed, etc.
So that attending and paying for college IS NOT the trigger for foreclosure- it’s that kids coming from already shaky financial families go to college. And these families would have likely shown up in the foreclosure category anyway. I’m sure all of us know kids growing up who ended up getting a job or going in to the military instead of heading off to college immediately because their families were experiencing financial difficulty. I think that’s less common now- we’ve fetishized “every kid off to college” regardless of the kids academic readiness and interests, and regardless of the family’s financial stability.
I don’t think the “clear implication” is clear at all here and I think this is very sloppy analytics. Dog meet tail. A house on my block is in foreclosure. The fact that they’ve got a kid starting college next week is absolutely irrelevant to their financial issues which have been brewing for the last five years at least. Lots of really bad choices compounding more bad choices. It’s sad. But paying for college has not caused their financial problems.
Correlation does not mean causation. Even sociologists should know that.
Here’s a link to the actual article: https://link.springer.com/article/10.1007%2Fs13524-018-0702-7 It was published in a peer-reviewed journal, so I expect that it’s nowhere near as laughable as some of you are assuming.
I don’t have the time or expertise to evaluate the actual analysis, but the plain language translation of what they are suggesting seems overwhelmingly likely to be true: College debt is an under-examined source of financial stress. While nowhere near as important as subprime lending, unemployment, and housing prices in triggering foreclosures, college debt nonetheless seems to have contributed to the spike in residential foreclosures ten years ago beyond what would have happened solely based on other factors. In effect, college debt was like another form of subprime lending that exacerbated the crisis.
Is anyone really willing to bet that’s not fundamentally correct?
Seems like increased spending on anything can increase the risk of forclosure. Since sending a kid to college is typically more expensive than having a kid in high school, that could help push some people closer to the edge of financial unsustainability that could lead to forclosure.
I am.
Every study I’ve seen seems to show that a medical/health crisis is the single biggest trigger for personal bankruptcy in this country. Why? Because of the cascade effect- big bills, time off from work or job loss, either temporary or permanent impairment or disability, long term issues (addiction post surgery? rehab?) AND the spouse or other family member having to cut back at work for caretaking, driving to dr’s appointments, etc.
JHS< I’d love to understand why you cite subprime lending, unemployment and housing prices… since many academic studies have shown these to be secondary to medical/health care for bankruptcy, not sure the difference.
College debt- secondary or tertiary? Causal vs. correlated?
I also don’t have the time to go through the analysis. And I’m happy to agree that college debt is an under-examined source of financial stress, just like divorce, death of the primary wage earner, addiction. But those aren’t college related.
The authors were not looking at bankruptcies; they were looking at the enormous increase in residential real estate foreclosures during the so-called Great Recession of 2007-2009. I was repeating what they were saying, based on the sources they cited. I don’t think that their list is controversial at all as to what were the main drivers of foreclosure increases in those years. (Which is not to say that health-care expenses may not have played a role, including by inducing people to borrow with sub-prime products. I don’t think there was any giant change in illnesses in that period, although there was certainly increased spending on health care, as there always seems to be. I don’t think the authors were suggesting that the three main causes they cited plus college debt exhausted the list of possible contributors to increased foreclosures.)