Bubble Pop!

Okay students, in what does easy money used to buy a product highly subsidized by the government result?  Why, this.

  • The delinquency rate for student loans made in the past two years is 15 percent – up from 12.4 percent in the 2005-2007 period.
  • Subprime mortgage delinquencies stood at 15 percent in 2007.
  • 19 percent of American households have a student loan debt.
  • Over the last 10 years, tuition rose 60 percent at private colleges and 104 percent at public colleges.
  • The average student loan was $27,253 last year, up from $17,233 in 2005.
  • Total outstanding student loans top $1 trillion. That’s more than Americans owe on credit cards.

Furthermore, tuition rates have been increasing at rate faster than any other part of the economy.

If it sounds a lot like the housing bubble, it is because it is exactly like the housing bubble… only with nothing to repossess and no escape in bankruptcy.

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7 Responses to Bubble Pop!

  1. Notamobster says:

    It looks an awful lot like the ironclad laws of economics having their way without regard to wishes or unicorns…

  2. DocO says:

    The tragedy to all of this is that the product (higher education) that the consumer (student) is buying has been degrading in quality (useful, factual knowledge and skills) over the years as it has increased in price out of all proportion to inflation AND …, wait for it…, all during a time that emerging technologies (self guided, personalized, computer and video based training) could have been decreasing the cost of the product while increasing the quality.

  3. R.D. Walker says:

    Speaking of Bubble Pop. Um, yeah. Here is this again.

  4. Uke says:

    @RD:
    Your last line about nothing to repo and no bankruptcy option leads me to wonder…

    How on earth does this bubble pop manifest itself once it happens? Not quite like any other bubble pop we’ve ever seen, that I can think of.

  5. R.D. Walker says:

    It may have already popped. There is a growing number of defaults and the value of the asset has dropped dramatically. Witness.

    Nearly one-half of college graduates in the United States are overqualified for their jobs, working at places that do not require a four-year college education, according to a nonprofit group.

    The findings of a study, “Why Are Recent College Graduates Underemployed?” issued this week by the nonprofit Center for College Affordability and Productivity, show that 48 percent of degree holders work in positions that require less than a bachelor’s degree.

  6. Rockheim says:

    You know.. I’ve often wondered aloud, and been largely ignored, about how nobody is screaming and yelling about the out of control and rising costs of college tuitions. Every leftist you can shake a stick at and all the occupy fools scream bloody murder about evil corporate profits, executive salaries, the rising costs of goods.. Yet nobody screams about the College system raping the students.. Sure.. they whine and cry about the surprising debt that they never saw coming.. How did this happen to me?!?!? It’s soooo unfair!! And then they target the banks who gave them the loans..

    I have a partial solution.. Since college debt is unsecurable I think that a “credit worthiness” test of sorts is in order. College students should have to declare their major.. And the availability of loans and interest rates are secured by the future expected gains of said majors and degrees..
    Eg.. Someone pursuing a degree in engineering.. Is deemed a worthy risk as their odds of employment and expected salary are all fairly positive. If you want to pursue sumerian lesbian literature in the 18th century as your course of study.. Well.. Get ready to fund it yourself as your expected employment opportunities begin at Barnes and Noble and end at McDonalds are not deemed adequaate to pay back your loans.
    Once the money for all these mostly useless liberal arts degrees dries up the colleges will have to do a top to bottom examination of their expenditures and they may find that all these progressive professors aren’t pulling their weight or attracting enough students into the schools.
    And for those who are getting loans after that.. It should be laid out for them the total costs of this education. All 4 years.. All costs.. Interest.. and the total payment as well as the expected timeframe for paying such a loan back.. And they, the people taking the loans, should be required to read said passages aloud. And then they should be asked if they understand what it is that they’re signing for. Then they should be asked what that means. And this should all be done on camera.

    So when the next whiner comes forward complaining about how they had no idea that their Masters in Renaissance art from Yale would set them back several hundred thousand dollars they could be shown said video and told to go away.

    • notamobster says:

      I find it amazing that we live in a society where someone with a Master’s Degree in FRICKIN ANYTHING is taken seriously when they say they didn’t know that ________ relative to their education & it’s associated costs, was going to happen.

      I don’t even have a degree, and I know what & how the system works. I just say that these people are idiots and should suffer the slings & arrows of their own stupidity.

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