By -
Aug 7, 2012
Federal Reserve Chairman Ben S. Bernanke said record U.S. student loan debt doesn’t put the
financial system at risk the way mortgages did because most
educational borrowing is backed by the government.
“I don’t think it’s a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government,” Bernanke said today at a town hall meeting with teachers at the Fed in Washington.
Outstanding educational debt, which includes loans taken out by students and their parents, is estimated at $1 trillion, according to the Consumer Financial Protection Bureau. About 15 percent is private student loans, issued by lenders including banks. The rest is backed by the government.
To contact the reporters on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net; Janet Lorin in New York at jlorin@bloomberg.net
To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net
“I don’t think it’s a financial stability issue to the same extent that, say, mortgage debt was in the last crisis because most of it is held not by financial institutions but by the federal government,” Bernanke said today at a town hall meeting with teachers at the Fed in Washington.
Outstanding educational debt, which includes loans taken out by students and their parents, is estimated at $1 trillion, according to the Consumer Financial Protection Bureau. About 15 percent is private student loans, issued by lenders including banks. The rest is backed by the government.
To contact the reporters on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net; Janet Lorin in New York at jlorin@bloomberg.net
To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net
1 comment:
All of us would like to hope that student loan bubble wiil not cause the crisis. Unfortunately we can hear only promisses and different kinds of predictions that everything will be okay, but student loan debt only becomes larger because the price for college education is extremely expensive, low in middle income familes just can not afford to send their students to college, even with a help of fast cash in advance it's hard to make payments this type of loans, it's not just a few thousands of dollars. It's a debt which usually takes long years to repay.
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