Page 50 - July-August 2018 GSE Report Flip Book

FANNIE MAE AND FREDDIE MAC JJUALN. U- ARUYG. 22001188
HOW U.S. EDUCATION BECAME A DEBT SENTENCE
Outstanding student loans in U.S. from 2006 to 2008 ($trillions)
A state’s unfunded liabilities are effectively a stealth mortgage on private properties
In the Wall Street Journal, Rob Arnott, founding chairman of Research Affiliates, LLC and Lisa Meulbroek, professor of finance at Claremont McKenna College. wrote:
...Think you can pass your property on to your heirs? Only net of the unfunded pension obligations.
We calculated the ratio of unfunded pension obligations relative to property values in each state. We used 3% bond-market yields as our discount rate to measure unfunded obligations, because while other assets ostensibly earn a risk premium above the bond yield, these assets can also underperform.
Unfunded pension obligations range from a low of $30,000 per household of four in Tennessee to a high of $180,000 per household in Alaska. They amount to less than 11% of the average home values in Florida, Tennessee and Utah and more than 50% in Alaska, Mississippi and Ohio.
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