Student Loan Debt: The Next Economic Crisis?
Taking bets as to what the next financial crisis is going to be that plunges us back into a deep recession? The San Franscico Chronicle wants to suggest a nominee:
Student Loan Debt.
“The new warning making its way through the financial media is the rising student loan burden,” Tim Parker writes.
Bullet points of Parker’s thesis follow:
- College remains the accepted path for 68.1% of high school graduates
- The average student loan debt for a college student in 2010 was $25,250
- Total student-loan borrowing for one year surpassed the $100 billion mark in 2010, making the total outstanding debt more than $1 Trillion
- Over the past 50 years, the rate of college tuition inflation has ranged from about 6 to 9% annually, sometimes twice the normal rate of inflation
- Current laws don’t allow student loan debt to be written off by bankruptcy proceedings
- Some students with more than $100,000 in debt may pay the equivalent of house payment each month for sometimes more than twenty years
- A recent survey found that around 50% of bankruptcy attorneys reported significant increases in clients who list student loan obligations as a significant financial burden
- A survey of the class of 2005 found that one out of every four became temporarily delinquent or haven’t paid for a significant period of time
Continuing the Discussion