background preloader

Student loan

Facebook Twitter

Student loans seen as potential ‘next debt bomb’ for U.S. economy. William Brewer, head of NACBA, has said, “This could very well be the next debt bomb for the U.S. economy” — something akin to the housing mortgage loan crisis that triggered the U.S. financial crisis.

Student loans seen as potential ‘next debt bomb’ for U.S. economy

“Obviously, in the short term, student loan defaults are not going to have the same ripple effect through the economy that mortgage defaults did,” Brewer said. “My concern is that the long-term effect may be even graver, because people who need student loans to try to get a higher education or retraining” will be unwilling to run the risk of taking out a student loan. Moody’s Analytics has evaluated the chances of a student loan crisis. “Despite its rapid growth even as credit quality weakened during and after the recession, student lending is not likely to turn into the next subprime crisis,” it said in a January report. The student loan market is one-tenth the size of the residential mortgage market. The Inghams of suburban Minneapolis are an example of how one family got into hot water. Goldman Explains Why The Amount Of Total Student Loan Debt Has Quadrupled Since The Year 2000.

Goldman's Alec Phillips and Hui Shan are out with a very good note about the size and implications of student loan debt in the American economy.

Goldman Explains Why The Amount Of Total Student Loan Debt Has Quadrupled Since The Year 2000

Student loan debt has gotten a ton of interest over the past year since A) it's growing B) there's a heightened interest in all things credit-boomy C) the bad job market has made the existing burden even more onerous. Good clean student loan stats aren't that easy to come by, but as of Q4 2011 there was at least $870 billion in student loan debt outstanding, says Goldman, and that number has quadrupled since the year 2000! So why the big surge? Alex Phillips and Hui Shan give four reasons: The cost of attending college has risen.

Meanwhile, here's a pretty interesting chart on the correlation between unemployment and college attendance. Goldman Sachs. The looming crisis of student loan debt. William Bennett: A college degree seems synonymous with debt and underemploymentBennett: Student loan debt is reaching bubble-bursting levels He says the government is not helping by flooding higher education with more loansBennett: The bad lending policies are eerily similar to causes of the subprime mortgage crisis Editor's note: William J.

The looming crisis of student loan debt

Bennett, a CNN contributor, is the author of "The Book of Man: Readings on the Path to Manhood. " He was U.S. secretary of education from 1985 to 1988 and director of the Office of National Drug Control Policy under President George H.W. Bush. (CNN) -- A college degree was once synonymous with academic excellence and workforce readiness. Last week, the Federal Reserve Bank of New York reported that student loan debt increased to $956 billion, more than auto loan debt or credit card debt. Student loan debt is reaching bubble-bursting levels. William Bennett The problem now rests in the hands, and wallets, of taxpayers.

Reform is needed at many levels. Student Loans: Debt for Life. (Corrects the 20th paragraph to provide a more recent total for student loans owed by people 60 and over: $43 billion rather than $36 billion.

Student Loans: Debt for Life

Corrects position of the National Association of Student Financial Aid Administrators on legislation introduced by Senator Al Franken.) This much we know: College pays. You can lose your house to foreclosure, but never your education. Four-year college graduates’ pay advantage over high school grads has doubled over the past 30 years. If money for tuition is tight, the advice goes, borrow what you need. If student loans are good debt, how do you account for the reaction of Christina Mills, 30, of Minneapolis, when she found out her payment on college and law school loans would be $1,400 a month?

Even if you buy into the notion that education debt is good debt, at what point does it become too much of a good thing? “The question isn’t the debt per se. That’s the value side. Better disclosure would help, too. Student Loans Weighing Down a Generation With Heavy Debt.