Is the Near-Trillion-Dollar Student Loan Bubble About to Pop?


Student loans have been going up since the recession began–and now defaults are up too. Something has to be done, but what?

For years, credit was a substitute for real wage growth in the U.S. And now as that debt burden has grown unsustainable, working families are barely able to keep up with payments, let alone spend enough to get the economy back on its feet. And student debt, as we’ve shown, is on the least sustainable trajectory of all.

Consider the potential impact on the economy if all of a sudden 35 million people were able to add to their monthly budget anywhere between $400 and $1000 that they no longer needed to satisfy exorbitant student loan repayments. And no longer faced with the threat of default (at a rate of 7 percent as of September 2010), credit scores would rise and more people with inclination toward starting small businesses (those things that every politician proclaims drive economic growth) could do so. Debt free degree holders would allow for more risk taking and innovation.

About Giorgio Bertini

Research Professor. Founder Director at Learning Change Project - Research on society, culture, art, neuroscience, cognition, critical thinking, intelligence, creativity, autopoiesis, self-organization, rhizomes, complexity, systems, networks, leadership, sustainability, thinkers, futures ++
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