Is it 2009-2010 or 1972-1973? If you're paying college tuition this year, it may be hard to tell. Tuition is up only 4.3% for the coming school year, the lowest rate of growth in 37 years, according to a survey of 350 private schools by the National Association of Independent Colleges and Universities. This is down substantially from the 5.9% increase for the 2008-2009 school year. Of course, this is for tuition only and does not include room and board inflation.

Before celebrating, though, remember that depressed housing prices and constrained financial markets make it tougher to dip into home equity to pay for school (a favorite strategy of the past few years), and layoffs are putting an obvious strain on household finances. So, the bargain in all this may be hard to find, even with financial aid increases of 9.2%.

The real estate research firm Zillow.com released a sobering statistic, and it took some by surprise: more than one-third of homeowners who bought in the past five years have negative equity in their homes.

Negative equity is owing more on your mortgage than the market value of your home. On the heels of the United States' greatest residential real estate boom in the modern era, how did the above occur?

Two factors, so says economist Peter Dawson.

First, many regions of the U.S., particularly the west, experienced abnormal gains during the 2003-2007 real estate boom. "Total appreciation rates over 300% were not unusual during the period. It was an amazing run, fueled by adequate national GDP growth, and low mortgage rates," Dawson said. "But as we've seen, ultimately the appreciation rates proved to be unsustainable, everywhere they occurred."

Dawson says a 7-9% annual increase in the U.S. median home price is normal, and his models label a 10% annual increase or higher as "outsized" -- a deviation from the mean that calls for a correction at some point in time. "But during the boom, it was not uncommon to see 30%, 40%, 50% annual increases over multiple years," Dawson said. "Clearly unsustainable. Downright frothy. But these conclusions were largely ignored during the boom, on the fallacy of 'what has occurred will continue.' "

Second, a financial habit shifted, Dawson said. Way, way back in the twentieth century, Dawson recalled, the biggest stigma when he grew up in a typical neighborhood in White Plains, N.Y., a suburb about an hour north of New York City, was... Not gaining acceptance at a good college? No. Not getting the hottest date for the high school senior prom? No. "We learned that the Smith's [not their real name] down the street had to take out...a second mortgage," Dawson said.

Morgan Stanley (NYSE:MS) has decided it does not want to take the risk of laying out more money on many of the home equity loans it has given to customers. Many of the houses backing these funds are now worth less than their mortgages. According to Bloomberg, Morgan "told thousands of clients this week that they won't be allowed to withdraw money on their home-equity credit lines."

Since most other banks and brokerages with similar loans out to their customers have the same problems Morgan does, it appears that the market is at the beginning of a period where, for many people. getting money from these facilities will come to an end.

Since consumers are already faced with high commodities and oil prices, costly credit, and falling home and stock values, the home-equity loan was one of the last places people could turn for capital.

The news is almost certainly bad for retailers and auto companies. Consumer access to capital seems to be shrinking by the day. Cutting off home-equity withdrawals may take balance sheet risk away for Morgan and its peers, but their customers will get squeezed even harder than the economy is squeezing them now.

Douglas A. McIntyre is an editor at 247wallst.com.

After a recent run-up in mid-March, many stocks in large money center banks and brokerages are back near multi-year lows. A great deal of news about mortgage-backed paper write-downs and poor first quarter forecasts is already in the market. So, what's wrong? It would seem like most of the trouble is already known to the market.

There may be several things which could hurt that financial sector nearly as badly as the housing crisis. One is related to the current problem. There are $1.2 trillion in home equity loans on bank books. With many houses valued at below mortgage value, this could be a real problem. Home equity holders could block home sales if consumers do not get the money to pay-off both the primary mortgage and secondary mortgage at a closing. The could further gridlock the housing market.

Perhaps more troubling is that large pools of credit card and auto debt have not hurt financial company earnings. These are sliced into pieces and sold as derivative paper just as mortgages were. A lot of this paper is still sitting on balance sheets.

According to The New York Times: "what investors fear is that financial companies' pain will not end with the troubled mortgages, which by some estimates have already resulted in more than $200 billion of losses." And, they are right to. Housing is not the only big sector of the US economy. There is a reason that a company like Merrill Lynch (NYSE: MER) fell another 14% last week. A lot of the bad loans and bad derivatives are not washed out of the markets yet.. That means that shares in banks and brokerages could make new lows.

Douglas A. McIntyre is an editor at 247wallst.com.

American consumers, the pivotal factor in the consumer-dependent U.S. economy, may have modified their spending philosophy, The New York Times reported Tuesday.

Stung by the housing market correction, stagnant wage growth in certain job segments, above-average debt levels, and a slowing economy, Americans are saving more and using credit less -- a shift that some analysts argue is a cultural inflection point of sorts, with huge implications for the economy.

Economist Steve Affinito told BloggingStocks Tuesday that while The Times' interpretative report did not "cite a large enough sample size to meet my fancy," it nonetheless provided data points that support what macroeconomic indicators are saying about consumer choices.

"We know that the savings rate has increased in the last six months, and retail sales are sluggish, at best. Take these and combine them with much tighter credit terms for home equity loans and other credit and what you get is a pull back in purchases, particularly purchases on credit," Affinito said.

Wow! I truthfully never thought I would see a story about lenders walking away from home equity loans [subscription required] rather than foreclosing on the home, but the Wall Street Journal reports that several banks are doing just that. Instead of foreclosing the home, mortgage companies which provided borrowers with equity lines or second mortgages on the property are walking away, writing off the loss and just leaving a lien on the property with the hope that some day in the future, when the house is sold or the owners want to refinance, they'll get their money.

Lenders that told the Journal they were writing off the loan rather than foreclosing include Bank of America (NYSE: BAC), Countrywide (NYSE: CFC) and Washington Mutual (NYSE: WM). Why would they just walk away? With home prices dropping, even if they did foreclose, they probably wouldn't get much or any money out of it anyway. Many of these homeowners owe more on the house than its worth. Only lenders with the first mortgage are likely to get any money by forcing a foreclosure.

Moody's estimates that losses on home-equity loans outstanding as of June 30, 2007 could ultimately total $58 billion on top of the $278 billion in losses on mortgages. "You can make a horrible decision by choosing to foreclose, " Steve Baily, a senior managing director with Countrywide, told the Journal.

Ted Allrich is the founder of The Online Investor and author of Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he offers advice to investors who are just getting started.

Subprime loans have been in the headlines, not in a good way. Lenders have lost billions. Homeowners have lost homes. It's a real big problem. But for the lenders the problems may only be starting.

While subprime loans are defaulting, there are loans that weren't subprime when they were made and have been paying regularly. But that may change due to their structure. These loans were made at interest rates below the current market rate, called teaser rates. These teaser rates were written for a year or two or even longer. Once those teaser rates expire, the loan then adjusts upward to current interest rates for home loans.

When the new rates adjust higher, so do the payments. Some homeowners won't be able to afford the new payment schedule. The actual number of those is unknown until the end of each month, when the payments are due and aren't made. While interest rates are moving downward at the moment, they may not move down far enough to help these borrowers. That means more mortgages may default over the next several months or years as the teaser rates become current. Only time will tell how many that will be. Not even the lenders know how bad this problem is since there's no way to estimate how many borrowers will stop paying.

Wal-Mart Stores Inc. (NYSE: WMT) plans to offer mortgages and home equity loans, according to MarketWatch. If so, it would be a stunning entry into the heart of a business currently controlled by banks. The federal government has kept Wal-Mart from getting a bank charter, to some extent to protect community banks.

But, due to Wal-Mart's size and balance sheet, it does not need a deposit base to offer mortgages. These loans are generally syndicated in packages to decrease the risk to any one lender. It is not clear whether Wal-Mart would adopt that tactic or not.

Wal-Mart may be offering the services as a way to increase traffic to its stores where it can sell customers other goods and services.

If Wal-Mart does go into the mortgage business, community banks have a great deal to fear, whether the retailer has a bank charter or not. A low interest rate home load from Wal-Mart is just a much competition as similar packages from money center banks.

There is only so much lending to go around.

Douglas A. McIntyre is a partner at 24/7 Wall St.