Student loans are still causing trouble for millions of Americans, owing a total of $1.7.7 trillion. The crisis has been a major political issue for some time, especially after former President Biden promised to eliminate all student loan debts, and eventually fulfilled only half of his promise. That billion dollars are not just numbers on spreadsheets; they represent the people who pay off their debts monthly, yearly and yearly. Although the standard repayment plan spans 10 years, the reality is even more difficult: the average borrower needs 20-30 years to repay the loan.
There are more than 2 million new college students each year, and on average, they graduate with $29,400 in debt. Some people, like medical students, have more than $250,000 in debt, which is a bunch of mortgages. Nearly $100 billion in new debt is generated every year, due to the pile of already unsustainable student debt. Similar to the way we (not) deal with public pensions, rather than tearing down failed systems, we keep feeding machines and crushing people’s lives and dreams. But perhaps there is a way to avoid this terrible fate by borrowing new ideas from similar fields.
Real Estate: Store of Value since Nixon (SOV)
The real estate market is another system that relies heavily on debt to continue to operate, just like student loans, it does not work well.
Real estate is a completely normal market where 10 times leverage can be placed on a single asset while investing all your savings in it. Talk about special risks. The entire market has been in a state of pain worldwide, not necessarily due to debt, but because of how the Fiat system turns real estate into an investment and saving mechanism. In turn, a huge investment from one generation becomes an unaffordable housing for the next generation. However, a portion of the population has been divested from assets, which is conducive to a better savings tool: Bitcoin.
Part of their arguments about divesting and turning to Bitcoin is that they predict that Bitcoin’s excellent SOV capabilities will lower real estate prices and cause damage to vulnerable and overpriced assets. This makes a lot of sense, especially for individuals who invest in real estate to find these Sov attributes; they now have to be risky with the increasing risk of the world making it once a “safe Sov” asset class. From wildfires everywhere to floods that were previously unthinkable, collections, new taxes and wars broke out, some investors have had enough.
But housing is still necessary and we still need to build a lot of new homes. In almost all major cities in the world, housing crisis is largely caused by shortages. This is because after the 2008 major financial crisis, there were few buildings in housing after the major financial crisis directly driven by housing debt. So even if all real estate owners put all the stocks of all the homes into the market, we still have to develop and build new homes. But when you also tell them that in Bitcoin’s words, it’s hard to convince real estate developers to do so, and the homes they are building will be worth less when they sell.
Bitcoin replaces real estate
That’s where German bitcoin and real estate developer called Leon Wankum, turned the problem into a solution. You might even say he used financial jiu-jitsu because his idea was to bundle new, debt-heavy real estate projects with Bitcoin funds. In this way, a $10 million project (of which $9 million is raised) will allocate a small portion of the financing to hedge the depreciation and devaluation of major assets, thus benefiting from appreciation of Bitcoin. In this way, real estate developers can take advantage of the debt-heavy nature of the real estate market to meet housing needs while also removing themselves from any SOV risks Bitcoin may pose to the asset.
This seems like a crazy idea. Bitcoin and Real Estate: Super conservative mainstream infrastructure investment combined with ultra-volatile digital savings trucks – unlikely marriage. However, polar opposition attracts an idea that an idea is crazy until someone replicates and makes it work.
Surprisingly, this is exactly what happened last year, when Newmarket Capital’s Andrew Hohns announced on TV that they had started using Wankum’s models to offer loans to real estate developers. They provide financing for a real estate project with some special conditions:
- Developers must use a small portion of them to buy Bitcoins located in custody.
- Bitcoin is inseparable from real estate assets.
- Bitcoin must be at least four years.
The experiment has participated in the competition. If the past were guides, this new investment structure would greatly reduce the burden on loans.
Bitcoin and student debt, rescue the next generation
At this point, the similarity with student loans should be Beautiful Clear. When 18-year-olds take out their mortgage to bet on their education, their future human capital is actually becoming real estate (collateral) that supports debt. Their ability to earn extra income from the knowledge and certificates they get from debt will help them pay it off (considering everything goes well). Investment margins become very sensitive and the risk increases dramatically when adding a large amount of leverage to any investment, whether it’s trading stocks, real estate, or your future. Your manipulation space will be reduced and you are trapped in the path you choose.
So if you are the real estate that secures the student debt of this mortgage size, maybe you can also get this loan by integrating Bitcoin into the portfolio and ease the burden on your main assets (you). This can bring great benefits to all relevant parties: reduce the risk of lenders and increase the borrower’s (you, students)’s thoughts and opportunities.
One of the main advantages of adding Bitcoin to your student debt structure is that you have two Rowing with financial repayment for current assets: Yourself and Bitcoin. By going to college, learning new skills and getting a certificate, you can open the way to get a better job and higher earning potential (aka higher salary). Bitcoin is more interesting to Bitcoin related to your student debt. As a teenager, Bitcoin’s compound annual growth rate over its lifespan was incredible. Even conservative figures suggest that Bitcoin will return about 60% per year for the foreseeable future. Bitcoin looks like Ferrari competes with horses compared to 10-15% typically provided by the S&P 500.
Another advantage is one that frustrates most students, once they understand Bitcoin, it is related to getting Bitcoin. Unlike most adults, undergraduates have little time to accumulate savings, so they can’t swap too much Fiat for coins. This can get incredibly frustrating, especially because you know, if you’ve been ten years old, you might be stuck in Bitcoin and retired from your entire lineage. But now you’re trapped at 16, saving pennies and sacrificing trivial bitcoin for your younger years, and that won’t change your life. So close, but far away.
But what is debt if it is not brought into the future purchasing power in the present debt? Debt is a time travel machine that allows people to buy assets by leveraging future income, income or salary. Thankfully, the current system is created so that you can also take control of your own eyes with a promise of future wages from a doctor, engineer, lawyer, or other profession at the moment of legal jail or war.
Interestingly, the minimum holding time recommended by Bitcoin is also the average number of years for a college degree – four years. This means that as long as you create a similar structure to what Newmarket Capital proposed, and Newmarket Capital (Bitcoin has a four-year holding period), you will use Financial Jiu-Jitsu. However, a four-year period does not mean that students need to sell. The question of how to manage financial status between repaying student loans, selling bitcoin, or buying more is a more complex and personal issue. Regardless of what any student does, using this hybrid approach, student debt can help young bitcoins jump up instead of taking a step back.
With this new approach, students and their families now have another thing to celebrate their graduation. And, if you drop out of school, for any reason life may affect you, your student loans now have a fail-safe approach that ensures you are never burdened by it. Now, students must find ways to apply this method through collaboration with loan providers or in a permissionless way (bitcoin way). If other students can bet on Wallstreetbets on their student loans, a future generation of Bitcoiners should be able to secure their future with a secure bet: Bitcoin.
