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Why is Everyone Ignoring the Student Loan Bubble?


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2011 May 3, 1:19pm   18,160 views  57 comments

by HousingWatcher   ➕follow (0)   💰tip   ignore  

Consdiering this is a forum full of people who claimed to spot the housing bubble before it burst, why is anyone not talking about the student loan bubble? Trust me, when it burst, it is going to be VERY ugly. You have thousands, if not millions, of bororwers out there whoa re going to default. It's just a matter of time.

Peter Thiel's College Bubble Theory Gains Few Believers

NEW YORK -- The average college graduate leaves school with $24,000 in debt and one in 10 are unable to find work of any kind. Recently, student loan debt exceeded credit card debt.

Much like the housing bubble, when home buyers took on outsized mortgages they were either lured into or which they knew they could ill afford, all in the service of realizing the American Dream of homeownership, students today are struggling with piles of educational debt assumed in service of a similar goal -- the American Dream of a college education.

According to the College Board, 70 years ago there were 1.5 million students enrolled at American universities. By 2006, that figure had swelled to more than 20 million. Meanwhile, the cost of tuition has grown steadily higher. Over the past 25 years, college tuition and fees have risen three times as fast as individual family income. And over the past decade, tuition has increased at a rate of 5.6 percent per year beyond the rate of general inflation.

Recently, with tuition costs rising and debt levels increasing, the skepticism has reached a boiling point.

Amid this backdrop, a Silicon Valley-based venture capitalist named Peter Thiel has inserted himself in a debate about whether a college bubble exists.

Namely, Thiel believes that a lack of innovation will result in long-term economic stagnation. He also argues that the housing bubble, which inflated the real estate market and sent prices soaring and finally crashing back to Earth, now threatens to dismantle higher education.

“A true bubble is when something is overvalued and intensely believed,” explained Thiel during a recent interview with TechCrunch. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Thiel’s slant has infuriated some, and emboldened others. But is he right?

http://www.huffingtonpost.com/2011/05/03/college-bubble-burst_n_857082.html

#housing

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54   WookieMan   2023 Nov 17, 2:51am  

Patrick says

Could just be a reporting artifact, a delay in the numbers arriving.

I think fewer people are choosing to go to college. And boomers are also dying now with a decent chunk having assets the kids will inherit. The boomers with assets likely were smart to save and pushed college on the kids. Same with grandparents dying. This always happened of course, but the numbers are just greater than in the past which is why I think people are dumping the debt sooner

I've noticed colleges seem desperate for students. I have about 5-6 friends with college aged kids that applied everywhere and got accepted everywhere no problem. Nice kids but not the sharpest knives in the drawer. Put this way, I wouldn't have been accepted to half the colleges they got into. I think it's literally a 4 year party bill at this point and it's been dumbed down outside of STEM fields.

My 2¢. Could be wrong but that's what I've observed since covid and seeing friends kids go off to school.
55   AD   2023 Nov 17, 9:20am  

WookieMan says


I think fewer people are choosing to go to college.


Need to track enrollment numbers or college students population such as through the Census Bureau.

Also, find out about colleges and universities merging, downsizing or shutting down due to diminishing enrollment like St Paul's College in Virginia.

There may be more students going to community colleges for the first 2 years in order to save money (and they do not have to take borrow as much student loan money).

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56   Misc   2023 Nov 18, 5:59pm  

The loan amount outstanding is dropping not because people are paying them off, but because Biden has been forgiving billions upon billions of dollars of loans.
57   AD   2023 Nov 18, 10:43pm  

Misc says

The loan amount outstanding is dropping not because people are paying them off, but because Biden has been forgiving billions upon billions of dollars of loans.


good point ..there is now $1.737 trillion in student debt ... Biden admin wrote off about 7% of student debt (or $127 billion) ... I wonder how much more is Biden going to forgive in student debt and what happens if a Democrat wins the White House in 2024 ....

^^^^^^^^^^^^^^^^^^^^^^^^^^^^

" Biden has managed to erase $127 billion in student debt so far for more than 3.5 million borrowers — more than any other president in history. His administration has used existing programs that were previously hard to access for many borrowers to deliver that relief."

https://www.cnbc.com/2023/10/29/biden-administration-has-forgiven-127-billion-in-student-debt.html#:~:text=Still%2C%20Biden%20has%20managed%20to,borrowers%20to%20deliver%20that%20relief.

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