Thread by @tony_nog

1) Thread - the great Student accommodation Ponzi scheme
(This thread won't end with what you might think)
There's a torrent of "Student accommodation" blocks, 25 stories high, being put up in my current and home town centre, I assume it's happening all over
Scam in plain sight?

2) now happy to be corrected however these blocks are reasonably luxurious (en suite, gym in the basement etc) and are a world away from the ragged student housing I had back in the day.

The prices are too, upwards of £125 per week!

3) When I was a student we shared the cheapest accommodation available, perhaps £700 pm between 5 people in today's money, the going rate for a 4 bedroom house where I live now, or maybe 1/3rd of what students are paying today after bills

4) how can students afford this? How are they able to shell out 3 times what I did for a luxury bedsit in effect over good old fashioned student digs?

Well, firstly, they can't get a "normal" shared house anymore, it would be a HMO (house in multiple occupation) and regulated

5) (bear with me, this is interesting I promise) that HMO regulation eliminates 80% of the rental market and allows canny landlords to charge £85 per room per week for a "luxury" (and they often are tbf) room in a shared house which is HMO certified

6) but again, how can students afford this £5-600 outlay every month?

Enter student loans...

As we should know by now student debt isn't debt at all in a traditional sense, it's a tax. You only start paying after a wage threshold & it's wiped out at 50 I believe

7) speaking to a friend of mine, neither his daughter nor her friends have started paying off their student debt, 3 years after leaving.

Many have done an MSc, something considered very exotic in my day.

Many of them will *never* clear their student debt

8) so here's the student accommodation Ponzi scam. If you have access to significant funds that you may never have to pay off, if you know you'll probably spend your 20s under the threshold in a low paid job, why *wouldn't* you shell out for expensive, luxury accommodation?

9) especially if you have no option, because the old fashioned "let's get a house together" one has been closed down through HMO regs? I certainly would, 3 years in a luxury flat on the never never.

10) Student debt that isn't paid off becomes national debt becomes tax payments.

So now we have created a system where future tax payments are being channeled not only to expanding universities but to rich, corporate, developers

11) Students meanwhile live in luxury accommodation they'll likely never be able to afford again then go into McJobs and insecure contracts that in many cases make no use of their qualifications

12) furthermore many of them will likely feel positively incentivised to not get better paid jobs, because then the student tax kicks in.

A perfect storm creating a lucrative wealth transfer channel

13) BTW I'm not blaming anyone for this (other than government), not even the developers - that's market forces....

Only it isn't, not really, because funds have been given without attendant responsibility and competition therefore isn't a required feature

14) I also know things are more complex than I've laid out and there will be exceptions. I will just end with this however.

In my day I got a full grant for Uni, but it wasn't that much, and the government took care of my fees.

Loans were not an option

15) I had to make my grant last. I left Uni with a 2k O/D in today's terms, which was my sole responsibility, and I was able to get relatively cheap accommodation

In the long run, it might have been cheaper to give everyone free UI education, but with limited funds

16) perhaps a process which leads to £40k debt per individual, half of which is never paid off, wasn't the best idea

End/