economic development

Student Loan Broke: Can Low Net Income Housing be a Thing?

Low-income housing is at least understood if not supported as a concept. At its simplest, there are people who can’t or don’t make enough money to sustain a home for themselves and their families, so low-income housing provides an option. For the people who need this and take advantage of it, low-income housing is a valuable public service, and for those who support it, the justification from a cost standpoint is clear.

As a college graduate with plenty of student loan debt left to live off, I know that the difference between low income and low net income isn’t much during those payback years. You feel poor. You feel like you’re failing. Like it wasn’t worth it. 

Pretty sure this is true: just 90 days after you graduate, you’re expected to start repaying your student loans. That’s what the deal was in 2005, so someone tell me if lenders have gone soft since then. I’ll wait.

Assuming that’s still the case, knowing the cost for college has gone way up since then, and also knowing that the job market hasn’t kept pace, I feel good in assuming my situation 13 years ago is either more common, more severe, or both today. As of 2016, the average salary for the first job out of college was just over $50K. Took me 10 years to make that. Journalism, ammiright?

Of that average, there’s an end of the bell curve that’s really hurting. They pay a mortgage every month before they even consider buying a home. That’s what student loans feel like–a mortgage. Even with what seems like a pretty good income, your net after debt is closer to that of the low-income housing demographic. It’s gross.

And this collection of thoughts hits me on my way to work, somewhere between 88.5 (the NPR station) and 95.7 (ESPN radio). I press a button three times to get from one to the other, and sometimes this happens. I can’t shake some thought, so I turn the radio down and start talking it out. I have my first meeting of the day with me while David Greene or Mike Golic quietly make up the background.

Student loan debt housing looks at a person’s net income after student loans. Other negative factors like credit card debt can’t be factored in, because this should be specific to those who paid a high price for higher education that hasn’t yet paid off.

I can already hear people saying, ‘Yeah, nice, but how are you gonna pay for it?’ Well, that’s pretty much a recurring thought of someone dealing with low net income, so I’m used to hearing it internally. Naturally, the stakeholders are beneficiaries if the program is successful, so there has to be a way to make them part of the solution when it comes to starting and sustain the damn thing.

Key stakeholders:

  • College grads – Obviously. They’re in need and every little bit helps.
  • Local businesses – The ones that require a steady stream of college-educated workers. The more they want to live in an area, the better chance businesses have to land them.
  • Economic developers – This concept has the ring of a powerful differentiator for college grads and businesses, which means more talent, stronger local businesses, and the potential for other businesses to locate there.
  • Property developers – Just like low-income housing, they have the chance to develop a piece of property, make some money, and likely receive whatever kickbacks they’re used to getting with similar projects.
  • Local colleges – Their students stay local, perhaps turn into grad students down the road. They stay local for a long time and stay happy, they turn into donors.

This isn’t a free ride for grads; they’ll still be paying rent, just not whatever the average is for that particular city. And maybe there’s a sliding scale involved to address the range in debt-to-income levels. Pretty positive numbers can be determined that are so much lower than the average rent that grads see the value, and so much higher than zero that it actually does help make the program possible.

Then there are the rest of the stakeholders. I don’t know, tax cuts? Fuck, figure it out. Critical to keep this out of the taxpayer realm, because selling “help these poor college graduates” doesn’t exactly resonate. One last thought: You don’t necessarily need a building for this type of thing. Instead, you could say it’s an application to the city or some other relevant entity that maybe reimburses either the tenant, the landlord, or both.

Consider the possible results (more talented workforce laying roots in your city likely to work and live there for a long time, supporting your economy and having babies that fill desks in your school districts). The scalability of this alone makes it worth a try (Or does it? Serious question). You can start with a small building one year and expand from there. It could start in one city one year, show some results and then spring up in cities all over the state. Cities, companies and citizens are looking for differentiators, and this feels like, at the very least, could be one of those. 

Serious or hilarious responses only. Note: I get to decide what’s serious and hilarious.

 

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