Student Loans: The Elephant In The Room?

Ever since the financial crisis, Americans have begun to see bubbles everywhere they turn. The damage wrought by the real estate bubble has been so extensive that the nation is rightfully terrified that another asset bubble is inflating beneath our noses, preparing to wreck the American economy at the drop of a hat. Bubble-phobia has now become issue number one for those who reject Ben Bernanke’s aggressive regiment of monetary stimulus, as they think it may be inflating bubbles in everything from real estate to Treasury bonds.

Ever since the financial crisis, Americans have begun to see bubbles everywhere they turn. The damage wrought by the real estate bubble has been so extensive that the nation is rightfully terrified that another asset bubble is inflating beneath our noses, preparing to wreck the American economy at the drop of a hat. Bubble-phobia has now become issue number one for those who reject Ben Bernanke’s aggressive regiment of monetary stimulus, as they think it may be inflating bubbles in everything from real estate to Treasury bonds.

(Phildesignart)

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.

Congratulations to the University of Phoenix, a private for-profit school, which has the dubious distinction of having 4,359 percent more student loan defaults than Columbus State, the top public school. A student loan is considered in default when it is 360 days delinquent. Number of Loans in Default

So you have student loans and can't wait to get them paid off? Join the club! There are millions of people across the U.S. who are in that very position right now.

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: