Skip to comments.Student loans seen as potential ‘next debt bomb’ for U.S. economy
Posted on 03/12/2012 8:19:35 PM PDT by SeekAndFind
Bankruptcy lawyers have a frightening message for America: Theyre seeing the telltale signs of a student loan debt bubble that is placing increased financial pressure on families struggling with their childrens mounting debt. According to a recent survey by the National Association of Consumer Bankruptcy Attorneys, more than 80 percent of bankruptcy lawyers have seen a substantial increase in the number of clients seeking relief from student loans in recent years.
In most cases, those clients could not meet the federal hardship standards that are necessary to discharge a student loan through bankruptcy proceedings. Instead, many of these parents or guardians who co-signed the student loans face the prospect of losing their life savings, cars or homes to collection agencies for aggressive private lenders.
illiam 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.
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.
Moodys 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. And more than 90 percent of student loans are federally guaranteed.
(Excerpt) Read more at washingtonpost.com ...
Why doesn't the GOP ask "Why is Big Tuition out to hurt the American youth?" over and over and give the left a taste of their own medicine?
If you are wealthy or have a large trust fund, feel free to take Liberal Arts courses. If not, major in the sciences.
This story helps to explain why the cost of higher education has gone through the roof.
And in many, many places, teaching assistants teach the main class, not the professor. I was a TA for 2 years 20 years ago, and I helped run labs, had a bunch of office hours a week to help students with questions and helping them understand things, but I never, ever taught an actual class period.
The government does very little to pursue lawyers. I have been told by lawyers that they are taught in law school that if they are successful (self employed) they will never have to pay off their loans. The government will put a lien on assets of someone who owns a home and owes $10K before they'll do anything to pursue a lawyer with a $100k debt. The reason is that a lawyer will take the government to court and spend money trying to avoid paying. A homeowner with a $10K loan can't afford to fight. It's an easy win
I collected on student loans for 8.5 years.
I am damn glad that my student loans were circa 1968 and were repaid in 10 years. It was well worth it for me, but not so much for young kids today. College costs have exploded during the last couple of decades.
The (non)Affordable Health Care bill made sure the tax payers would be on the hook for the student loan debt.
The whole house of cards is crashing down, folks.
“Just like we saw with the housing bubble, the student loan debt bubble just continues to grow and grow and grow.”
I’d imagine parents are going to stop co-signing for the loans, especially as they realize they can’t be re-paid on a Wal-Mart greeter’s salary.
Higher education, like home ownership and children, are a thing of the past for most Americans; access will be limited to the “protected” classes.
“You can bet that later this year Obama will position himself as wanting to write off everyone’s college loans... but the mean, evil Republicans are in the way of that goal.”
I don’t see any other way he holds on to any of those voters, but that still doesn’t address the jobs issue which is killing his crop of young voters of yesteryear.
I heard on the radio this morning that the NCAA expects to rake in $11B - yes Billion - dollars on the upcoming NCCA Men’s Basketball Tournament.
As a parent struggling to help 2 students through college, that seems obscene to me. Just heard it on the news, so haven’t researched where that money might end up, but have a feeling not much of it will go toward scholarships..