The Next Bubble: Student Loan Debt Now Outranks Credit Card Debt

According to the WSJ article of August 9th,  the average undergraduate loan debt,  now stands at a whopping $30,500 (pre-interest).  This is due in part to people seeking more education and retraining as well as some students opting to remain in college longer to avoid poor job prospects. College enrollment has tripled over the past four decades, “demand [for student loans] is driven by the cost of education, which has grown at an extraordinary rate over the past three decades.”  Based on Consumer Price Index data, the cost of tuition and fees has more than doubled since 2000, and has outpaced inflation across all goods, housing, energy and health care.

Youth unemployment, estimated at nearly 20% among those below the age of 24 has been much higher than the rest of the workforce — creating an even more pessimistic outlook for student loan repayment. The share of federal student loan defaults rose significantly last year, especially at for-profit colleges and universities, where 15 percent of borrowers defaulted in the first two years of repayment, an increase from 11.6 percent the previous year. 

By Ken McElroy