Erstwhile Senator

I went to Dartmouth. It costs roughly $60,000 a year all in. I now build homes for a living. They cost roughly $350,000 to build. Both of these numbers are completely insane. And they are insane for the exact same reason. The moment the government guarantees a loan, the seller stops caring what the buyer can actually afford. College tuition exploded after the federal government started backing student loans with no underwriting and no discharge in bankruptcy. Home prices exploded after Fannie Mae and Freddie Mac started buying mortgages and removing risk from lenders. When a bank knows it will get paid no matter what, it will lend to anyone. When the bank will lend to anyone, the seller raises the price. When the seller raises the price, the buyer just borrows more. Nobody feels the pain until the bill comes due 10 or 30 years later. Colleges added $200 million rec centers and hired thousands of administrators because students were writing checks with money that didn't feel real. Home sellers listed at $500k because they knew the bank would approve it regardless of whether the buyer could sustain the payment. I benefited from both systems. My Dartmouth degree opened doors. The homes I build get financed by these same banks. I am not pretending to be above it. But I look at both industries from the inside and tell you they run on the same engine. A guaranteed loan that disconnects the buyer from the real cost of what they are purchasing. The university and the mortgage lender have the same business model. They are financing tools that happen to have a campus or a front door. If the government removed the guarantee from the student loans tomorrow, tuition would drop 40% within five years. If Fannie and Freddie disappeared, home prices would correct in the same direction. The prices are essentially fake. They are a reflection of how much debt a bank is willing to issue, not how much the product is intrinsically worth. I say this as someone who went to an expensive school and builds homes. Both systems are broken in the exact same way and nobody talks about it because too many people profit from the status quo.