Higher education is like a mirror of the housing crisis. Just like society/government said "everyone should own a house", it said "everyone should get a college education".
In both cases, government made more money available, and lenders started to package/sell the loans on Wall Street. Since the lenders sold the loans, they didn't care about defaults and started relaxing their standards. Since so much money was available, both house prices and college expenses started to climb, increasing the need and amounts of loans. This created a cycle.
The housing market is now correcting, and the education market should be next.
Which makes me wonder: If people are walking away from mortgages because their houses are worth less, will people with student loans try to do the same thing? When someone who racked up $50,000 in debt for an $80,000 degree, sees the price of the degree fall to $40,000 after the educational bubble bursts, will they whine and try to bail out of paying?
Friday, 24 September 2010
Is The Education Market The Next Credit Bubble?
Posted on 09:50 by Unknown
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