Mortgage Industry Impacts on New

MORTGAGE INDUSTRY IMPACTS on NEW COLLEGE GRADUATES: STUDENT LOANS, JOB MARKET, & HOME BUYING OUTLOOK

TECHNICAL REPORT

LETTER of TRANSMITTAL

This letter serves the purpose of transmitting the technical report entitled: "Mortgage Industry Impacts on New College Graduates: Student Loans, Job Market & Home Buying Outlook." This technical report is being transmitted to Professor Doe on the part of Joe Smith and is a report that informs what college students can anticipate in the future in relation to the impacts that student loans and the job market will have upon their home purchasing potential following college and in consideration of the burden of student loan debt obligations. This report will demonstrate that the outlook for students attending colleges under today's provisions of financial aid and student loan programs will create a great burden of debt for these students and in fact, will demonstrate that colleges have overcharged students at exorbitant rates and that the driver for this was the federally guaranteed student loan program. Finally, this report provides a guideline and some much-needed and useful information for the college student which will enable them to make the wisest choices possible concerning the college they choose to attend and the manner in which they handle the financing necessary to secure a college degree while simultaneously avoiding many of the pitfalls of incurring debt for the opportunity to earn a college degree.

MORTGAGE INDUSTRY IMPACTS on NEW COLLEGE GRADUATES: STUDENT LOANS, JOB MARKET & HOME BUYING OUTLOOK

TECHNICAL REPORT

LIST of FIGURES iv.

ABSTRACT v

INTRODUCTION 5

TERMS & DEFINITIONS 6

EDUCATION SPENDING and FEDERAL FINANCIAL AID 7

DECLINE in PAY LEVELS AMONG COLLEGE GRADUATES 10

THE BASICS of STUDENT LOANS for COLLEGE 19

PERSONAL & PROFESSIONAL RISKS of STUDENT LOAN DEBT 21

VII.INVESTIGATION of a PROGRAM of STUDY at a COLLEGE or UNIVERSITY 21

VIII FUNDING MECHANISMS 27

FINDINGS of the STUDY 27

CONCLUSION 29

BIBLIOGRAPHY 30

MORTGAGE INDUSTRY IMPACTS on NEW COLLEGE GRADUATES: STUDENT LOANS, JOB MARKET & HOME BUYING OUTLOOK

LIST of FIGURES

FIGURE PAGE NO

Federal Financial Aid Comparison

1980 and 2004 8

Use of Students Loans's Related to Parental Education

Students in Their Late Twenties

Borrow Most from Government

Student Loan Programs 12

Comparison of College and University Types and Prospects of Employment Following College Graduation 23

Measures of Satisfaction 24

MORTGAGE INDUSTRY IMPACTS on NEW COLLEGE GRADUATES: STUDENT LOANS, JOB MARKET & HOME BUYING OUTLOOK

TECHNICAL REPORT

I. INTRODUCTION

This report intends to provide a guide for students entering college, students already in college, and also for students who are to soon graduate from college to inform these individuals of the environment of the mortgage industry and specifically in relation to the impacts of students loans and the job market upon the home buying outlook for individuals once they have graduated from a college or university. The report of Peter (2007) published in the Christian Science Monitor relates that the job market was steadily improving however, since that time the job prospects for college graduates have changed drastically and furthermore for those planning to attend college, receiving funding for college has become much more difficult than at the time of Peter's report in 2007. At the time of this report it is stated that among college graduates "both old and new, a university degrees seems to be a virtual employment guarantee" however this is not the case only one year later.

In the work of Draut (2008) entitled: "Address the Pain, Reap the Gain" states that "today's young adults are very likely to be the first generation to not surpass the living standards of their parents. Evidence of their declining economic opportunity and security abound, from widespread debt to lower earnings in today's labor market for all but those with advanced degrees." (Draut, 2008) Draut calls college "a luxury-priced necessity" and states that with the fast rising cost of tuition and "anemic federal financial aid" what has been created is a 'debt-for-diploma system'..." which leaves "two out of three undergraduates leaving school with student loan debts average $19,200..." (Draut, 2008) During the 1970's Draut explains that even prior to the time that "college became essential for a middle-class lifestyle, our nation was more committed to helping students afford college."(Draut, 2008)

II. TERMS & DEFINITIONS

Student Loan Debt Consolidation: Consolidation of student loan debts is a process by which all the separate loans are placed into one single loan, which generally results in one having lower payments and many times a lower interest rate.

Debt Consolidation Specialist: This individual, if qualified and reliable is likely to be found through referral of the school one is attending. One may also contact local government offices for referrals to a good debt consolidation specialist. Information may also be found on the Internet concerning debt consolidation services.

Grants: government funding that does not have to be repaid.

Scholarships: college funding that does not have to be repaid in the form of sports scholarships, scholarships won in beauty pageants and other contests and events, and scholarships presented by civic organizations and businesses to students to assist their funding for college.

FAFSA - the Federal Student Loan Application for Free College Funding.

I. EDUCATION SPENDING and FEDERAL FINANCIAL AID mere generation later, "state spending on higher education is at a 25-year low and federal financial aid is increasingly debt-based, with only 38% in the form of grants." (Draut, 2008) Students do not receive assistance in being able to afford college but instead are assisted into very deep debt for having attained a college education. Last year Congress passed the College Cost Reduction and Access Act, an act that will provision $20 billion additional student aid over the next five-year period and while held to be an improvement of a major sort the reality is that the impact of this act on access to college will be "negligible." (Draut, 2008) the act made only very modest improvements including:

1) increasing the Pell grant maximum about approximately $500 per year over a five-year period of time reaching $5,400 by 2012;

2) increasing an income-based repayment system that caps the amount student borrowers would pay on their loans to 15% of their discretionary income; and 3) reduces the interest rates that new student loans charge reducing them by fifty-percent in 2012. (Draut, 2008)

III. DECLINE in PAY LEVELS AMONG COLLEGE GRADUATES