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Student Loan Bubble: Air Added



We wrote last month about America’s ballooning student loan problem … which is compounded by the fact the American job market is terrible (and about to get terribler).

Well guess what … the bubble is getting bigger.

According to data released this week by the U.S. Department of Education (which for the record ought to be permanently, not partially shut down), the default rate for the three-year period ending September 30, 2012 climbed to 14.7 percent.

That’s the highest it’s been since 1995. Last year, the default rate was 13.4 percent.

“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Education Secretary Arne Duncan said in a statement.

Really? Thank you, Captain Obvious.

An estimated $146 billion of taxpayer-subsidized student loans are now in default, people. But Duncan isn’t about to slow down the gravy train.

“The Department will continue to work with institutions and borrowers to ensure that student debt is affordable,” he said. “We remain committed to building a shared partnership with states, local governments, institutions, and students—as well as the business, labor, and philanthropic leaders—to improve college affordability for millions of students and families.”


The federal government is going to continue feeding tuition hikes at both government-run and private institutions by conning future borrowers into the same trap … perpetuating a vicious cycle fueled by additional debt.

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