Wealth Inequality By Hecht: Article Analysis

Student loan debt has become a discouraging problem throughout today’s economical foundation. “Overall debt is falling but student loan debt is increasing year-over-year and at a much faster rate,” chief executive David Stevens told The Washington Post. “[Young graduates] are already on the margin for being able to qualify for a mortgage. If you add on a

Andrew Ross, wrote in his article, "Mortgaging the Future: Student Debt in the Age of Austerity”, that the average student debt as of 2012 was over $27,000 (Ross 24). This continual debt deters graduates from pursuing future life events, such as buying a home or a car because they cannot afford to pay for both a home and their student loans. Joseph Stiglitz referred to the percent’s produced by the Federal Reserve Bank of New York, “almost 13 percent of student-loan borrowers of all ages owe more than $50,000, and nearly 4 percent owe more than $100,000” in his article, "Student Debt and the Crushing of the American Dream" (Stiglitz 1). This debt that is created can only be the result of one thing, extremely high costs to receive a higher education. The country has made it nearly impossible for students to get a job without a degree, and colleges have made it nearly impossible to survive after graduation because of on going loans. The amount of debt that is owed by students will continue to become higher if nothing is done to stop the increase of tuition costs.

Traditional homes were founded on the premise that there were two married parents in home owning, mortgage paying with a car in the driveway cookie cutter advertisement. Life in today’s world is not as pretty or as a slick advertising copy from the 50’s and 70’s would have you believe. Social class can be the difference in livelihood based off of economic status and also varies greatly by zip code, even within the same state over a period time. Today this disparity in wealth and economic fluidity is something still vitally affected by social class; often traditionally associated with a lack or abundance of money or privilege of a higher social standing by one’s peers or society in general.

Another topic demonstrated in the book is inequality at home. For many, home symbolizes stability and physical security; for others it signifies an investment, an identity, or a crucial mark of citizenship. Yet, not every home and community offers all of these advantages, and not everyone takes the same path home. In recent years, buying a home has become more difficult as both wealth and race matter. High cost of home ownership is just one of the many reasons underlying the stratification of secure housing in a strong

Here in the United States, there are many forms of consumer debt, which help contribute to the large sums of debt countless Americans find themselves faced with. Directly effecting many college students is student loan debt. Student loan debt is now the second largest form of consumer debt behind housing” declares the Federal Reserve Bank of New York (Grisales). This is due to the fact that student loan debt grew 7.1% in 2014 to $1.2 trillion (Grisales). If this statistic alone is not worrisome this next one is sure to be. The amount of debt in the housing market that helped to spark the last recession was only $1.3 trillion (Grisales). Due to the increased amount of debt required by students to attend college many students are feeling the wrath. According to the U.S. Census Bureau, “In 2014, 11.7 percent of females and 17.7 percent of males between the ages 25 and 34 were living with their parents” (Grisales). The fear of obtaining massive amounts of debt is driving the current generation of student’s to put off many future hopes and dreams. While causing them to move back home to save money. The current student loan crisis is crippling the economy and ruining the lives of American students.

In previous years homeownership is was what people in the United States showed pride in, up until recent years after the fall in the market economy. The current homeownership in the United States have declined significantly since the years have passed and is now the lowest it has been in decades. Even though the housing market has been improving over the years in the United States, and the increasing homeownership rate is a worthwhile policy goal for America, home ownership still continue to decline.

According to federal agencies, student debt is crushing the middle class. According to the author, “the debt is stopping a growing proportion of families form buying homes, saving for retirement, and making purchases that will keep our economy on the road to recovery.” Different financial crisis have caused families to use their savings and home equities, which is usually how some families help pay for

The article points out that student loans are at an all-time high. “Student loans are one of the fastest rising sources of debt. As of the third quarter of 2013, student debt stood at $1.027 trillion or about 9 percent of total household debt, up from about 3 percent in 2003.” (“Student Loan Debt Is Torpedoing Home Sales” RealEstateEconomyWatch.com 2014) It goes on to say that the average college graduate in 2012 graduated with student loan debt of approximately $29,400.

Statistically, one out of seven families live in severe physical deficient housing. In fact, the housing and stock market revealed in July of 2009 that the Great Recession further widened the gap and income disparity between the average, hard-working Americans and the top 1% of wealthy Americans. Edward N. Wolff suggests that the average American produced a massive 36.1% drop in overall marketable assets while the top 1% of wealthy Americans only lost 11.1%. This income gap disparity ensures that ever-increasing need for affordable housing as the economic crisis worsens.

Demand for jobs decreases and the cost of housing in America continues to rise, making it hard for people to afford it. According to United States Home prices and Values, the median home value in the United States is $182,500 and the cost of housing has increases by 3.7% over the past year and predicts that the cost will increase by 2.4% within the next year. Clearly from this data, we can tell that people living below the poverty line are unable to afford the houses. Also, with their meager income, they have spent it on other things such as food, clothes, schools that are necessities for their survival other than housing. So many things to spend on with their income makes it impossible for them to make a decision and ended up abandoning their

Studies suggest that fifty percent or more of new jobs that will appear in the upcoming decades will require their employees to have a postsecondary education (America’s Promise). However, the rising price of a college education is preventing many students from achieving their goal. This only adds to the number of unemployed young adults and the number of Americans living in property. People always say if you’re tired of being poor then do something about it but it is not as simple as it used to be. In the past thirty years the cost of getting a college degree has increase by 1,120 percent (Mosbergn). Not only that, but if you do manage to get a degree after you graduate you are often left paying off student loan debt. As of 2013, the amount of student loan debt to be paid off has surpassed one trillion dollars. Another reason why many student opt out of going to college is because they believe it is a waste of time. While that may not be the case for all students a recent poll showed that forty percent of college graduates are unemployed and left struggling to pay off a student loan alone with no job

One of the social issues concerning power, status, and class in American society today is income inequality. The income gap between the social classes has increased drastically throughout the last few decades, creating a significant gap between the wealthy and the poor. This gap has become so large that the middle class has nearly diminished, creating a social class comprised of the rich and the poor. The significant gap between the two social classes is unhealthy for the economy because it provides too much power in the hands of those with high social status.

The extensive amount of national debt held by college graduates in federal student loans debt is affecting their ability to qualify for a home loan and a delay in housing market growth. Students coming out of college today have more federal student loan debt than ever and they’re coming into an economy that is under performing. The $1 trillion in student loan debt is starting to slow the economy just as the housing bubble created a mortgage debt problem. For couples looking to buy a house, it is more difficult to qualify for a home mortgage when even one of the buyers has student debt, and even harder if both buyers have student debt.

Homeownership is a double-edged sword. It is the “American Dream” to one day own a house. Compared to their predecessors, Millennials are seeing the advantages and disadvantages of homeownership at an earlier age.  These early generations believed owning a house was the cherry-on-top to being an all-around American and achieving the “American Dream”. As a cynical generation who grew up with information at our fingertips and the world falling around us, millennials see homeownership differently. “The cautious and conservative approach to home buying displayed by millennials is driven by the fact their outlook on life was shaped by a number of bad things when they were young—the terrorist attack on the World Trade Center in 2001, the 2008 financial crisis, the housing bust with mass foreclosures and a weak recovery that has so far provided incomes below that of prior generations” (Stowe England, 36). We learned that the world was not fair and that it is time to redefine the “American Dream” to reflect our current economic society.

Every American dreams of finding a job that pays well enough so that they may comfortably take care of their loved ones and themselves for years to come. Most Americans hope to find some way to make a living that they enjoy, something that they view as productive. Unfortunately, many do not have this luxury. In our society, a good portion of the population is forced to hold the base of our country in place while hardly being redeemed for their time and effort, and thus the problem of income inequality. Numbers of these people live from paycheck to paycheck, barely getting by, not because they manage their money poorly, but because the value of their time at work is negligible.