National / International News
According to a new report from TransUnion, the burden of student loans on young people, ages 20 through 29, is much heavier than it was for that age group a decade ago. Charlie Wise, a vice president at TransUnion, looks at what is called the “consumer loan wallet” – how debt shakes out.
“Certainly, that student loan piece is a much, much larger share of that overall wallet,” he says. “In fact, it has nearly tripled between 2005 and 2014.”
On average, a twentysomething today has about $25,000 in student loan debt. That is up about $10,000 from 2005. Older borrowers are also carrying more student loan debt, in part because they co-signed loans with kids and grandkids.
Mortgages are down, as a percentage of young American’s debt. “If you were to look at that as a graphic, a bar chart, you would essentially see that the decline in mortgages is almost exactly matched by the increase in the student loan piece,” Wise explains.
There are several reasons for that. According to Brent Ambrose, the Smeal Professor of Risk Management at Penn State University, “lenders have been tightening underwriting standards; so, it is more difficult to get a mortgage now.”
Today’s twentysomethings may have learned a thing or two from the downturn. Less of their debt is credit card debt.
Rob Spiro is the co-founder of Good Eggs, a Brooklyn startup that brings the local farmers market to your front door.
In order to deal with the demands of an inherently unpredictable food environment, the company is putting together a software engineering team that not only builds a website where you can shop for food, but sophisticated logistic systems throughout its locations.
Good Eggs is currently providing services to Los Angeles, Brooklyn, New Orleans, and the San Francisco Bay Area. And as Spiro points out, "If you look at the market in any given city, the inventory is 100% different." Which is why the company has designed small "Foodhubs," each one with their own unique supply chain.
Being able to centralize activity will help local farmers compete with industry giants. Spiro says the ultimate goal is to have 1,000 Foodhub's located around the world, serving 10,000 food producers, and millions of customers.
Click the media player above to hear Rob Spiro in conversation with Marketplace Tech host Ben Johnson.
The financial press has been sounding alarms over a trend toward more buybacks of stock by big, publicly traded companies. Stories in the Economist, the Wall Street Journal, and now Bloomberg have warned that corporations may be buying back too much stock with an eye to pushing up the price, at the expense of investment in their businesses.
Michael Mauboussin, head of global financial strategies for Credit Suisse, takes a different view. He doesn’t think more buybacks means less investment.
"When you buy back stock, it’s not like the money disappears," he says. "It’s going back to investors, who themselves are re-investing it."
So even if the company isn’t investing in its own business, shareholders can invest in somebody else’s.
That sounds like a great idea to Aswath Damodaran, who teaches corporate finance at NYU’s Stern School of Business. When he looks at the biggest companies buying back the most stock—companies like Microsoft, Hewlett Packard, IBM—he sees a pattern.
"I mean you look at that list," he says, "and every single one of them, you look at the last decade, have a history of destroying value— of investing in things where they have nothing to show for it 5 years out, 10 years out. I look at that list, and I say: Thank God for buybacks."
In other words, if a company doesn’t have great ideas to invest in these days, then giving money back to shareholders could be the right thing to do. And the market may thank it with a higher stock price.