It’s the kind of motto one sees on a T-shirt in a shop in the touristy part of town, but over the last few years it’s had a particularly painful ring of truth to it. Students in America are staying in education longer and are struggling to obtain full, gainful employment once they leave. This, combined with the rising costs of tuition, has seen the outstanding balance of student debt go past the one trillion mark and delinquency rates increase.
Talk is in the air of a bubble, as pundits point to student loans themselves and to the securities that are built from them. But is what’s going on “a bubble” in the usual sense? And more importantly, what does this say about college education in America?
Debt bubble by design
It does feel similar to the housing boom and bust of the last decade in that America has policies specifically aimed at encouraging people to take on a type of debt that is viewed as socially acceptable, even desirable. Government sponsored housing behemoths Fannie Mae and Freddie Mac are without comparable peers — the entities encouraged home ownership since their creation that is above and beyond what other many countries would even consider desirable.