Is the Student Loan Bubble About to Burst?
By Eric Blair
April 26, 2012
In February of this year, the S&P warned that student loans may be the next bubble to burst in US economy. Moody’s also issued a similar warning in 2011.
With the interest on student loans set to double on July 1st, will it pop the student loan bubble, or is it the necessary medicine to slow down the growth of the bubble?
It seems we won’t have that debate because politicians in Washington, including both Obama and Romney, agree that raising the interest on student loans will be an “enormous burden that threatens the economic recovery.” In other words, keep the bubble going to win middle-class votes and avoid any pain.
In either case, students are already suffering from having to paying back massive principal balances because the cost of attending college has increased 439 percent from 1982 to 2007, and even more since then. Meanwhile, during that same period, median family income only rose 147 percent.