Student Loans: The Elephant In The Room?

If you're in your 20s, you're probably going through one of the toughest financial periods of your life -- especially if you went to college.

(Corey Templeton)

When it comes to placing blame on mortgage lenders, regulators, or consumers for 2008's crippling housing crisis, it's fair to say each played a role. 

The following comment brings together in one article the various themes we have been writing about weekly, and emphasizes why we are maintaining our bearish position at a time when so many bears have thrown in the towel.

Student loan debt is now one of the Obama Administration's biggest cash cows. The government is poised to pocket a record $51 billion profit from federal student loan borrowers this year, according to a report by the Congressional Budget Office. 

James Pethoukoukis notes the skyrocketing ratio of student loan debt to household income, the currently spiking default rate on student loans, and wonders if a new federal government bailout is in the works:

A new report from the Federal Reserve Bank of New York delivers generally positive news about the economy with one glaring exception: student loan debt. The amount of debt and delinquencies are climbing, and some experts say the official numbers don’t even capture how big the problem really is.  In the third quarter, there were fewer foreclosures, increased credit card and auto lending (indicators of rising consumer confidence), and an overall drop in our collective debt load, led by decreasing mortgage debt. Student loans are another story.