What lessons on student loans can be learned from the searing national misadventure with mortgages?
There are provocative parallels between student loans and the mortgages that created the disastrous housing bubble. In both cases, the government promoted plausible goals— higher education and home ownership—to excess, through the overexpansion of debt to levels beyond the repayment ability of a large percentage of borrowers. In both cases, the government guaranteed much of the credit, putting the ultimate risk of bad debts on taxpayers. In both cases, debt expansion drove the price of the object being financed (colleges and houses) to heights sustainable only if debt could always be increasing. In mortgages, it could not, and the subsequent collapse raises the question—will there be a similar outcome with student loans?
1 comment:
Student loan debt is one of the biggest financial problems for the US, now it’s even more than a credit card debt. The education should not be a luxury, it should be affordable and there should be more alternatives to student loans, because graduating with thousands dollars of debt is not the bet option. Also there is almost no reaction from a job market, because students should take out payday loans on-line to make payments on their loans, most of employees ask or a job experience. So I think that there’s still a lot of work on the US education system.
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