Coyote Blog explains why student loans are the next big financial bubble and why student loans are fundamentally different from ordinary loans:
When you mess with pricing signals and resource allocation, you get bubbles. And one could easily argue that OWS is as much about the student loan bubble bursting as about Wall Street.
I must say that I never had a ton of sympathy for home buyers who were supposedly “lured” into taking on loans they could not afford. The ultimate cost for most of them was the loss of a home that, if the credit had not been extended, they would never have had anyway. US law protects our other assets from home purchase failures, and while we have to sit in the credit penalty box for a while after mortgage default or bankruptcy, most people are able to recover in a few years.
Student loans are entirely different. In large part because the government is the largest lender via Sallie Mae, student loans cannot be discharged via bankruptcy. You can be 80 years old and still have your social security checks garnished to pay back your student loans. You can more easily discharge credit card debt run up buying lap dances in topless bars than you can student loans. There is absolutely no way to escape a mistake, which is all the more draconian given that most folks who are borrowing are in their early twenties or even their teens.
I can see it now, the pious folks in power trying to foist this bubble off on some nameless loan originators. Well, this is a problem we all caused. The government, as a long-standing policy, has pushed college and student lending. Private lenders have marketed these loans aggressively. Colleges have jacked costs up into the stratosphere, in large part because student loans disconnected consumers from the immediate true costs. And nearly everyone in any leadership position have pushed kids to go to college, irregardless of whether their course of study made even a lick of sense vis a vis their ability to earn back the costs later in the job market.
Although the final numbers don’t show it (13 of 32 for 219 yards, 2 TDs, 2 INT), Christian Ponder had a pretty good game in his first NFL start. Rookies will make mistakes early on (and some players never stop making rookie mistakes), so coming out of the game with two touchdown passes and two interceptions is a good outing for a rookie quarterback. If nothing else, he provided a jolt of energy to a team that (in Jim Souhan’s wording) “the previous week played with all of the enthusiasm of guys in orange jumpsuits picking up roadside trash”.
