Student Debt Case Study

The Kindleberger-Minsky model of financial booms and crashes is a great application to understand the issue of students’ loans. The issue of students’ loans started a long time ago as the government accepted to lend money to people who wanted to attend college. There was no problem with the government lending money as long as they were sure that borrowers would start making payment within months after their graduation.
There was an initial displacement as people who graduated from high school thought that they could all benefit from students loans to get a degree then they would find a job to pay their debts. Students’ loans created opportunities for students who wanted to attend college, but could not afford the cost of attending it. As the first generation of students who attended college started graduating and making money, it became a speculation as their lives changed. The speculation spread quickly with the success of first generation students. At that moment, many students who were graduating from high school thought that if the first generation did it then nothing could stop them from borrowing from the …show more content…
The Japanese bubble and the students’ loans debts are similar as people still suffer from it 20 years from when it occurred. During the Japanese bubble, its economic health was critically affected; the issue of the students’ loans debts is affecting the U.S economy as the number of cases increases tremendously. The students’ loans can be covered by relatives and other recent form of debt can also be covered by a firm. The subprime mortgage and the students’ loans debts are both delivered to people who are in need of help from the government in order to survive or meet their needs. The differences between students’ loans and other recent form of debts are that others form of debts might results from misleading information and chain of