A College Siren Call – Going to a for-profit college today is like purchasing a home with a subprime loan at the peak of the housing market – The massive student debt bubble expanded from $200 billion to over $960 billion from 2000 to 2011 with a big push from for-profits at a time when incomes contracted.
The college debt problem is boiling over and spilling hot water onto an already weak economy. This is no longer a petty niche issue when we are quickly reaching $1 trillion in outstanding student loan debt. What is more problematic is the acceleration in tuition over the last decade. Most of the combined data is looking back deep into the past when most of the problem has hit in the last decade. How bad is it? In 2000 total student debt was roughly $200 billion. Today it is above $960 billion. So in a matter of ten years the amount of student debt has gone up over 380% while household income has actually fallen. The players in the student debt market are largely connected to the big financial institutions and the government is willing to grease these juicy wheels just like it did for the mortgage debt crisis. The integration between government and the big banks is like a marriage made in graft heaven.
The student debt keeps moving on up
Virtually every sector of household debt has contracted during this crisis aside from one, student debt:
It is now a memory that student loan debt has far surpassed total credit card debt. Student debt is also more ominous in the sense that discharging it is nearly impossible. Even mortgage, auto, and credit card debt is easier to discharge in bankruptcy. You now have a growing number of people being sucked into usury levels of student debt and many are being pulled in from the for-profit institutions that have placement rates that are abysmal.
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