EASY CREDIT IS INFLATING A MASSIVE STUDENT-LOAN BUBBLE

[Geee]

Human Events:

Americans are still talking about the recently deflated housing bubble, but there’s a new bubble in town. It’s the student loan bubble and when this one pops, it might dwarf the wreckage we’ve witnessed in the real-estate markets.

In the latest news, the Federal Reserve’s Board of Governors warned that soaring student-loan debt has “parallels to the housing crisis,” according to a May report in Bloomberg. As with housing, free-flowing cash will lead to widespread default. Of course, it’s easier to repossess a tract house than to take back a potentially worthless degree.

Federal Reserve Chairman Ben Bernanke dismissed these concerns by saying that most of the money in the student-loan sector is federal money, which just means taxpayers – rather than lending institutions – will take the initial hit. But the board of governors makes a salient point as student loan debt soars to $1 trillion and exceeds the nation’s level of credit-card debt.