Friday, September 6, 2013

Student Debt Not A Bubble But Still A Problem

Jordan Weissman from the Atlantic on the J P Morgan's exit from the student loan game and why it doesn't signify a debt crisis of the scale and magnitude of the U.S.'s bygone subprime bubble era:

"But there's also a greater point here. For the most part, it's not helpful to think of student lending, circa 2013, in terms of bubbles at all. Rather, as Chadwick Matlin has put it at Reuters, it's more of an anvil weighing on a large but discrete group of very unfortunate borrowers. In all but the most rare circumstances, it's impossible for former students to discharge their bad debts in bankruptcy. That means the government is mostly protected from defaults. So are the banks, to a degree.
Young adults, however, are on the hook for debts they can't handle, but which they'll likely continue to take on so long as college costs stay high. There won't be a moment where the market goes "pop." But there's still a crisis that needs to be addressed.

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