Skip to comments.Are student loan debts setting the stage for the next bubble?
Posted on 03/03/2014 8:04:05 PM PST by Lorianne
Maybe its just a sign that the markets are getting overheated: Americans are taking out student loans in part to cover everyday expenses. The Wall Street Journal reports on this phenomenonin which borrowers are using student loans as stop-gap financing to cover everything from monthly bills to groceries to previous student loan payments. The development is particularly troubling as student loans hit a staggering $1.1 trillion, and as college tuition costs continue to rise.
While some of the growth in student loans is attributable to people seeking more education, the Journal explains, these loans are attractive for other reasons too: For one thing, many of those seeking student loans can avoid credit checks.
This combination of rising costs and opportunistic borrowers leaning more on ever-growing student debt seems like a recipe for trouble. The only consolation is that the private banking system may emerge relatively unscathed. Thats because the US government, which has basically taken over the student-lending business over the last few years, would be on the hook for bad loans. That means taxpayers may take a loss if students cant repay their debts. But maybe thats better than another banking crisis.
(Excerpt) Read more at qz.com ...
They better pay or they are going to jail in my world.
On the other hand, maybe today's student has been indoctrinated into thinking that if they can't find a job, Uncle Sugar Daddy will bail them out.
Bingo! Hold everything! We have a winner!!!
Hey, why not. It worked for the big banks / financial houses.