Student Loan Debt and the Next Financial Crisis

debt

Matt Phillips and Karl Russel, NYTimes, 9/12/2018

It’s interesting to think of the growing costs of education as a bubble. Like many homeowners during the foreclosure crisis, college graduates borrowing to pay for school find themselves “underwater” – owing more than their education is worth on the job market.

There are important differences between the housing and student loan bubbles, though. Student loan debt, while increasing rapidly, pales in comparison to the debt wrapped up in mortgages in the United States, and much of the debt owed by students was loaned by the U.S. government. So, any potential student loan crisis will not be as large, and will not have as large a direct impact on the banking system as the foreclosure crisis.


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