When will student loans bubble burst?

[mikegg]

Just trying to get an understanding of when might the student loan bubble burst.

Way too easy to get a student loan. Way too easy to graduate college. Way too many graduates and not enough jobs. Way too many deceiving colleges that encourage you to take out a massive loan. Way too many "online" colleges that promise highly uneducated and highly gullible high school dropouts that a useless degree can get them a 50k/year job.

 

[crashtestdummy]

It will burst when (if?) the government limits loan subsidies to for-profit colleges.

 

[EagleKeeper]

Let people declare their major and institution on the loan forms.
Loans are approved as a percentage of tuition based on predicted new jobs in that market field.

Let some stats person figure that out.

 

[crashtestdummy]

Let people declare their major and institution on the loan forms.
Loans are approved as a percentage of tuition based on predicted new jobs in that market field.

Let some stats person figure that out.

I was thinking about that, but it'd be really hard to enforce. Many students don't declare until their third year, and people will find ways of gaming the system.

 

[PingSpike]

I don't see how it can burst without mass suicides since the law was changed to pay or die model for the loans. There's no real risk for the people loaning the money, the pressure for degrees is still high and I don't expect kids to suddenly get smarter. Maybe if there is a sea change in culture against college education in general resulting in collapsing demand that might cause a price war in the crowded education market. Ideally kids would just be more careful with their degree and school choices but there is a reason the 18-25 demographic is so heavily marketed to despite their lack of wealth.

 

[Ausm]

Not sure paid mine off 25 years ago.

 

[Fern]

Just trying to get an understanding of when might the student loan bubble burst.
-snip-

Good question.

I don't expect it to be too long given the current jobs situation.

The high loan amounts coupled with the somewhat high interest rates and no job prospects combined with the bankruptcy rules mean it's all but certain IMO.

I suspect some type of effort at 'reform' if not outright forgiveness by the fed govt. I.e., our national debt will balloon (again).

Fern

 

[EagleKeeper]

Good question.

I don't expect it to be too long given the current jobs situation.

The high loan amounts coupled with the somewhat high interest rates and no job prospects combined with the bankruptcy rules mean it's all but certain IMO.

I suspect some type of effort at 'reform' if not outright forgiveness by the fed govt. I.e., our national debt will balloon (again).

Fern

If they are going to forgive debt from student loans; I want my $500 back from mine :biggrin:

Why should the idiots get rewarded for bad behavior/choices

 

[sunzt]

Considering the only way to get out of a student loan obligation is to die i don't foresee any bubble burst unless bankruptcy rules change. Remember, as of right now, the issuers can do just about anything to get their money back such as garnish wages, take your retirement money, and even garnish your social security.

The real estate bubble popped because people never had to pay back their mortgages as they went underwater leaving only the issuers there to take the losses. With student loans, people can't get out.

 

[HumblePie]

Why is the OP so concerned about creating second class citizens?

 

[Fern]

-snip-
With student loans, people can't get out.

OK, but what happens if they can't pay?

Fern

 

[glenn1]

OK, but what happens if they can't pay?

Fern

We allow the university the right of repossession, by forced lobotomy if needed. And subject to public flogging the college acceptance officers who allowed the deadbeat asshole to be admitted.

 

[sunzt]

OK, but what happens if they can't pay?

Fern

become a teacher, military, or other select public service worker for x number of years until you qualify for cancellation...

or die...

other options:

http://www.rhl.org/blog/blog/finances/what-happens-when-you-default/2680/

-No Tax Refund
-Garnished Paycheck
-Benefit Deduction
-You will be Sued
-Your Cosigners will be Sued too

So you don't even have to make any money for the lenders to get money from you. And if you do make money in the future, the lenders will get a piece of it... likely forever.

 

[werepossum]

I suspect we're well on our way to higher education also being a right and existing outstanding student loans being forgiven. At the very least, unions and professions preferred by progressives (teacher,government worker, community organizer, not-for-profit employees) will see student loans forgiven. I'll be surprised if this doesn't happen in Obama's second term.

 

[HamburgerBoy]

Why is the OP so concerned about creating second class citizens?

What is this supposed to mean? No college education = second class citizen?

And regarding the op...

It will burst when (if?) the government limits loan subsidies to for-profit colleges.

This. I go to college basically free thanks to grants by the government, the state, and the college, all without any loans, and I'm not even a minority. If the powers that be are willing to give away money that can only be redeemed at college, why wouldn't the colleges charge just enough (or more) to eat up all of it?

EDIT: And this is an inexpensive public university I go to as well.

 

[HumblePie]

What is this supposed to mean? No college education = second class citizen?

And regarding the op...



This. I go to college basically free thanks to grants by the government, the state, and the college, all without any loans, and I'm not even a minority. If the powers that be are willing to give away money that can only be redeemed at college, why wouldn't the colleges charge just enough (or more) to eat up all of it?

EDIT: And this is an inexpensive public university I go to as well.

Ever try to get a good job without a college degree? Let alone something like publish a paper, or get any real respect in the professional world? Thought not.

 

[Munky]

When enough students default on their loans. That number is increasing BTW.

 

[SandEagle]

pay your loans.

 

[HamburgerBoy]

Ever try to get a good job without a college degree? Let alone something like publish a paper, or get any real respect in the professional world? Thought not.

Define "a good job". Plumbers, electricians, etc do fine without one, and tons of people with college degrees can't find jobs. I think the point of the op is that there's no point in pumping people through college if you have to lower standards to do it. Do you think a person with a C/B average from an online university will get a good job, publish papers, or get respect for it?

 

[EagleKeeper]

pay your loans.

On this, I agree with him

 

[fstime]

The government has ruined college education.

Their decision to so heavily subsidize college for young adults with loans and grants has allowed universities to rise costs year after year at extraordinary rates since they know even if a $200,000 education is not affordable by 95% of the population, the government will pick up the tab.

Children are also indoctrinated in high school to believe no college education means failure so we have a much higher number of high school graduates going to college and over saturating most fields.

Why not limit all government aid to state universities. What makes a $55,000/year private university so much better than a $8,000/year state university.

Another theory is, that it is all part of the plan. The United States is all about debt. Individual debt drives everything. Once you buy that house, you're on the hook for the next 30 years, once you buy that car you're on the hook for the next 5 years.

Now, they can get you in their debt driven system before you even landed your first real job. And once your in their system, your their slave for the rest of your life until you can afford to live the rest of your life in a retirement home.

 

[silverpig]

If they are going to forgive debt from student loans; I want my $500 back from mine :biggrin:

Why should the idiots get rewarded for bad behavior/choices

They should forgive it.

And banks should price that risk into all their loans going forward.

This would make it even more expensive to go to school.

And this would drop tuition prices because there wouldn't be so much cheap and easy money for tuition.

It wouldn't really affect poor kids much though, because it would make it easier to give scholarships. (If tuition is $10k instead of $50k, you can send 5 kids to school with the same scholarship as before, even though loans are more expensive).

 

[LegendKiller]

The government has ruined college education.

Their decision to so heavily subsidize college for young adults with loans and grants has allowed universities to rise costs year after year at extraordinary rates since they know even if a $200,000 education is not affordable by 95% of the population, the government will pick up the tab.

Children are also indoctrinated in high school to believe no college education means failure so we have a much higher number of high school graduates going to college and over saturating most fields.

Why not limit all government aid to state universities. What makes a $55,000/year private university so much better than a $8,000/year state university.

Another theory is, that it is all part of the plan. The United States is all about debt. Individual debt drives everything. Once you buy that house, you're on the hook for the next 30 years, once you buy that car you're on the hook for the next 5 years.

Now, they can get you in their debt driven system before you even landed your first real job. And once your in their system, your their slave for the rest of your life until you can afford to live the rest of your life in a retirement home.

Students don't have to take out debt. I met a kid this summer that was a long-haul mover during the summers and is taking 6 years to get through school without a dime of student loans.

You can do the same with cars or a house if you want. Just gotta live within your means.

 

[fstime]

Students don't have to take out debt. I met a kid this summer that was a long-haul mover during the summers and is taking 6 years to get through school without a dime of student loans.

You can do the same with cars or a house if you want. Just gotta live within your means.

You are correct, students can work part time. Even better, be a great student and get scholarships.

However, most 18 year olds are financially illiterate. Personal finance isn't taught as a part of most high school curriculum. They simply see their student loan debt as a number they will eventually take care of when they assume they will get their job, in their field, with competitive pay, straight out of college aka the perfect scenario.

If most kids had any sort of a brain with some basic financial skills, these private $55,000/year private universities would be deserted when there is an option for an $8,000/year education at public state universities. At the same time, you have to put some blame on the government for making all this too easy.

 

[Doppel]

90 day late rates are skyrocketing now. This cannot go on indefinitely, though predicting when it's over I sure can't do.