The Ever Inflating Student Loan Bubble

by Ryan on August 20, 2011

in Culture,Economy,Politics

A consequence of low interest rates, scatter-shot government policy, and a careless band-wagon investment effect, “bubbles” have unfortunately defined our economic trajectory since the late 1980s.  We’ve been living in the age of bubble:  the S&L bubble, the tech bubble, the oil bubble, the housing bubble, potentially a gold bubble, etc.

So why not add a student loan bubble to the list!

While general personal debt has risen 100% since 1999, student loan debt has risen 511% in the same period, which is slated to total $1 trillion by 2012.  The college tuition racket is in full swing, raising prices well beyond the rate of inflation:  if tuition was $10,000 in 1986, it should be around $20,000 today with inflation; but in reality that same education costs over $56,600!  Institutions took full advantage of the Congress-induced student loan gravy train in the early 1990s and never looked back.

The victims were kids who should never have qualified for the loans they were given, who being promised lucrative jobs were told they could pay back the loans easily, whose society told them they must attend college even if they have no business being there.

In short, we sold our kids on a false entitlement mentality which is suffocating their futures.

The inescapable truth is that this bubble will burst one day.  Overall, it’s unclear what that will mean.  With an economy driven by consumer spending and Obamanomics nailing them at every turn, delaying major purchasing decisions seems inevitable, sinking us deeper into stagflation moving forward.

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