Tags: student | loan | debt | bubble

NY Fed: America’s Student Loan Bubble Is Expanding

Friday, 30 Nov 2012 12:37 PM

By John Morgan

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
Student debt has reached a staggering new high — increasing $42 billion in the last quarter alone — even as average earnings of new college grads continues to erode, according to a New York Federal Reserve report.

Outstanding student loan debt now stands at $956 billion, and the percentage of loan balances more than 90 days delinquent has increased to 11 percent.

According to data from Citi Research cited by The Fiscal Times, tuition at four-year public universities has increased by 72 percent since 2000, while the average earnings of workers aged 25 to 34 with bachelor’s degrees has slumped 14.7 percent during the same time period.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

Student loan delinquency rates now exceed those of credit card, mortgage and all other types of consumer debt, the Fed report showed.

President Barack Obama has promoted easy availability of student loans, although critics charge that politically popular position entices some students who cannot pay into life-long debt.

About 93 percent of student loans in 2011 were made by the government, and Stafford loans, which account for more than three-quarters of federal loans, impose no credit standards, according to The Times.

Some experts believe a “student loan bubble,” reminiscent of the recent housing credit bubble that allowed unqualified buyers to purchase homes, is forming in the education sector, The Times noted.

Student debt is senior all other consumer debt, meaning even Social Security payments can be garnished to pay delinquencies.

Further, Naked Capitalism’s Yves Smith told CBS Moneywatch that student debt “has contributed to the fall in the homeownership rate, since many young people who want to buy a house can't because their level of student debt prevents them from getting a mortgage."

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink

 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Facebook
Google Plus
You May Also Like

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved