Are we Facing a Student Load Debt Economic Crisis?

 By the Left Coast Rebel

Is the $1 trillion + student loan debt market about to blow up?

Yes.

Writes Tyler Durden at Zero Hedge:

...the student debt bubble, which at last check just surpassed $1 trillion , is growing at $40-50 billion each month. However, just like subprime, the first cracks have now appeared. In a report set to convince borrowers that Student Loan ABS are still safe - of course they are - they are backed by all taxpayers after all in the form of the Family Federal Education Program - Fitch discloses something rather troubling, namely that of the $1 trillion + in student debt outstanding, "as many as 27% of all student loan borrowers are more than 30 days past due."
In other words at least $270 billion in student loans are no longer current (extrapolating the delinquency rate into the total loans outstanding). That this is happening with interest rates at record lows is quite stunning and a loud wake up call that it is not rates that determine affordability and sustainability: it is general economic conditions, deplorable as they may be, which have made the popping of the student loan bubble inevitable. It also means that if the rise in interest rate continues, then the student loan bubble will pop that much faster, and bring another $1 trillion in unintended consequences on the shoulders of the US taxpayer who once again will be left footing the bill.

Read the rest at Zero Hedge.

 Reason.tv recently shot a fabulous video, "3 Reasons We Shouldn't Bail Out Student Loan Borrowers":



 ...and Tim Cavanaugh writes on the topic today as well:
You may want to hold off on that home purchase/new business start/auto purchase/flat-screen TV/evening out/vente cup of coffee. 
You keep hearing that economic recovery is gathering strength. (Which in practice translates into record numbers of people on food stamps, fewer people working for a living, and a drop in both new and existing home sales.) But here’s a big D-Minus that could bring down the whole economy’s GPA:
According to the new Consumer Financial Protection Bureau, outstanding student loan debt now tops $1 trillion. And more than a quarter of that debt is delinquent

ALSO READ: At the Cato Institute, "D.C. Drove up Your Student Loan Debt"

Via Memeorandum.

1 comment:

  1. Damn, I worked and saved to get my college degree. I guess I was the stupid one, heh?

    ReplyDelete

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