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The Already-Here US Higher Education Loan Bubble

http://www.usatoday.com/money/perfi/college/story/2011-10-19/student-loan-debt/50818676/1

Some people in US are asking rather obliviously, why are the students protesting on Wall Street (and main streets)?

The above may provide some hint.

•Defaults. The portion of borrowers in default — more than nine months behind on payments — rose from 6.7% in 2007 to 8.8% in 2009, according to the most recent federal data.

That’s default against the Federal government loans.  Money that directly eat into tax revenues and increases the debt.

…total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.

So, that is about $88 billion in default in 2009.  Additional consequence on top of unemployment.

 

 

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  1. zack
    October 19th, 2011 at 12:00 | #1

    lesson 1 in democratic politics:
    When the masses start revolting, distract them with threats of international war (Iran) or find some other foreigner to blame (China)

  2. October 19th, 2011 at 17:01 | #2

    This is gonna be a huge problem since many young grads can’t find jobs and that is gonna discourage them from ever paying back once they go into default. I think from certain perspectives the students have more grievances because the predatory nature of student loans is even worse than the subprimes.

  3. October 19th, 2011 at 23:47 | #3

    Agreed with melektaus! Why students not going to take stand on the road. The greedy situation of student loans is even worse than the sub primes. Therefore they don’t have any ways rather this.

  4. October 20th, 2011 at 11:11 | #4

    @melektaus
    Indeed, if unemployment rate rises, such translates directly into student loan defaults.

    Hey, but I thought student loans are usually with more favorable terms, especially government backed loans. I can also see the public more willing to help students than Wall Street.

    I can see that legitimizes the OWS, because the U.S. government actually came out and bailed out the bankers. Why not bail out these unemployed students?

  5. October 20th, 2011 at 16:29 | #5

    @YinYang

    Yep, the public probably will be more likely to bail out the student. Unfortunately, the government probably will not want to go that rout unless there is lots of vocal pressure in support of them but that’s unlikely in the near future.

  6. October 21st, 2011 at 21:17 | #6

    Frankly, I think it pale compare to the credit card debt now carry by the US consumers. Default of credit card payment could trigger another banking crisis.

  7. October 23rd, 2011 at 12:26 | #7

    When the masses start revolting, distract them with threats of international war (Iran) or find some other foreigner to blame (China)

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