Will The Student Loans Bubble Pop?

A WSO user not too long ago wrote a personal, almost poetic piece about his own experience with student debt titled, I Am The Toxic Debt. I can't help but think about the imminent dangers of unscrupulous student loans lending, as many institutions are still being chastised for easy lending which created the housing crash. Is our institutions doing the same thing, lending to students in a lack-luster economy? From Q4 2007 to Q1 2012, student loans have grown from $93 to $452.6 billion, a growth of 332%.

Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? Nearly 35% of the total federal assets, over four times the 8.6% percent for the total mortgages outstanding.

This doesn't include private loans. Estimated total outstanding loans are estimated to be about one trillion dollars. But I get it, human capital and innovation is the driving force of economic growth. In a piece by Bloomberg:

Keep in mind that much of that $1 trillion is "good debt." Most borrowers have manageable loans, and workers with a bachelor's degree earn 84 percent more over their lifetimes on average than those with only a high school diploma. They also face much lower unemployment rates. So a college loan remains a very smart investment for many people.

Do you think student loans could be the next bubble? Is congress doing enough to contain the problem? Or do you think the level of debt will prove to be a worthy investment into the US economy?

Comments (417)

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Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

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'We're bigger than U.S. Steel"

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'We're bigger than U.S. Steel"

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Please don't quote Patrick Bateman.

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"That dude is so haole, he don't even have any breath left."

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"And the last thing, how much do you charge for a career consultation and would you accept a check?"

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"That dude is so haole, he don't even have any breath left."

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Need fast financial help?Learn more about online loans !

May 31, 2013
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Here to learn and hopefully pass on some knowledge as well. SB if I helped.

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My WSO Blog

"Unbelievably Believable" -- RG3

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May 31, 2013
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"One should recognize reality even when one doesn't like it, indeed, especially when one doesn't like it." - Charlie Munger

May 31, 2013
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My WSO Blog

"Unbelievably Believable" -- RG3

May 31, 2013
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Here to learn and hopefully pass on some knowledge as well. SB if I helped.

May 31, 2013
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But Rhaegar fought valiantly, Rhaegar fought nobly, Rhaegar fought bravely.

And Rhaegar died.

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yellow t-shirt

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"You stop being an asshole when it sucks to be you." - IlliniProgrammer

May 31, 2013
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Here to learn and hopefully pass on some knowledge as well. SB if I helped.

May 31, 2013
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Here to learn and hopefully pass on some knowledge as well. SB if I helped.

May 31, 2013
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Yours truly,
The Young Investor

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I am not cocky, I am confident, and when you tell me I am the best it is a compliment.
-Styles P

May 31, 2013
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I am not cocky, I am confident, and when you tell me I am the best it is a compliment.
-Styles P

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man made the money, money never made the man

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