What Are The Risks Of The Student Loan Bubble

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I will be examining the risks of the student loan bubble. Over the last 5 years the American federal reserve bank has increased spending on federal student loans over 1,000%. From $100 billion to over $1 trillion dollars. According to Kate Hardiman from University of Notre Dame “Economists believe the amount of federal money allocated to student loans shown in this graph is highly “unsustainable.””. With the increasingly large amount of risky student loans being given out its not going to be uncommon for students to default upon them, which means that the students will not pay the federal reserve and they will never get their money back. Unlike mortgages or auto loans, there is very little background checks, no cosigner, and no checks to make …show more content…
These students who drop out will most likely be working for a lower wage then if they were to graduate with their intended degree. These students will not only have less money to pay it back, they may not feel obligated to. I’m not saying that all students will miss payments, but most likely a large percentage of ex-students will. Students dropping out of college isn’t the only worry, students who successfully graduate college may not get degrees that can successfully land them a job, which results in them having very little money to pay back their loans. According to the Washington Post “In 2010, only 62 percent of U.S. college graduates had a job that required a college degree.” this shows that about 2/3 of college graduates get a job related to their study. Leaving the other 38% working standard jobs which didn’t involve a college degree. This could result in those students not paying back it at all, because they feel cheated by the system or have more important things to spend it on, like family and necessities.

Initial Inquiry Question(s)

How is the student loan bubble affecting students today. Will the student loan bubble be the next cause of the economic rescission. What are the causes of the student loan bubble. How will the student loan bubble affect people going to college. What are risks that

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