The student loan bubble is one waiting to burst (bonds, fund, credit check)

[Currency Pair Crocodile]

One trillion in student loans. How did it get this far? Not that I care.

I'm pretty sure wall street is profiteering off these bonds. Who's buying them? People made money off the housing bubble. This is a richly opportunistic venue, students will always be racking up debt.

Student Loan Rates Could Double if Congress Doesn

[CouponJack]

A lot of this has to do w people not thinking ahead and figure out how they are going to pay back a 40 -100k college bill. Its just like people who purchased more than they could afford during the housing bubble.

[long101]

^agreed. Just as 'housing prices always goes up' 'more education always means a higher salary'.

[CouponJack]

Yeah. Well you know whats going to happen.

Just like taxpayers are going to be on the hook for homeowners who displayed financial bad behavior (bought more than they could afford), the same crap is going to happen w/people who took out student loans...people who played by the rules are going to get it stuck to them w/o any lubrication....

[texdav]

I really thnik the rates will just up as no one wmats to bail;out anther system now.

[TuborgP]

Originally Posted by Currency Pair Crocodile

One trillion in student loans. How did it get this far? Not that I care.

I'm pretty sure wall street is profiteering off these bonds. Who's buying them? People made money off the housing bubble. This is a richly opportunistic venue, students will always be racking up debt.

Student Loan Rates Could Double if Congress Doesn

This is one of the biggest problems we face. How did it get this way?
Readily available loans with no credit check and unlimited funds available. It is the worse nightmare and bubble about to happen. Why would you let someone 18 years old start to borrow money, hmmm lets say 20K with no credit check and no background check on their academic abilities. How about the unemployed single parent with 5 kids who wants a loan of 12K a year to go to a for profit school that recruits on tv. Pure fiscal suicide.

[Currency Pair Crocodile]

But unlike housing, the banks cannot foreclose and confiscate the property.

The individual has 40 to 50 years to repay and the banks will squeeze as much money out as they can. Can a student file for bankruptcy and abandon the debt?

That's why bonds backed off these debt instruments could be seen as a good play. Anyone has thoughts?

[rock_chalk]

Originally Posted by Currency Pair Crocodile

Can a student file for bankruptcy and abandon the debt?

Generally, student loans are non-dischargeable in bankruptcy.

11 USC § 523 - Exceptions to discharge | LII / Legal Information Institute

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
(A)
(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

[TechGromit]

Originally Posted by rock_chalk

Generally, student loans are non-dischargeable in bankruptcy.

The housing bubble and the student loan bubble are not quite the same thing. A big part of the housing collapse was caused by people borrowing more then they could pay back and getting foreclosed on (or walking away from there obligations) leaving the bank stuck with the bill and lots of excess inventory.

Since it's almost impossible to walk away from your student loan obligation, there will not be this kind of collapse. People might reduce the rate they pay back there student debt to a point it will never get paid off before they die, but they will not be walking away from it.

Originally Posted by Currency Pair Crocodile

Can a student file for bankruptcy and abandon the debt?

Absolutely, it's called suicide.

[andywire]

Originally Posted by TuborgP

This is one of the biggest problems we face. How did it get this way?
Readily available loans with no credit check and unlimited funds available. It is the worse nightmare and bubble about to happen. Why would you let someone 18 years old start to borrow money, hmmm lets say 20K with no credit check and no background check on their academic abilities. How about the unemployed single parent with 5 kids who wants a loan of 12K a year to go to a for profit school that recruits on tv. Pure fiscal suicide.

Biggest problem we face? I wish. There are so many other things going on at once, and adding it all together, this one is just another compounding problem. Most of these debtors are in no position to scoop up these cheap foreclosed houses though. That's definitely a problem going forward... Very hard to see them stimulating the economy going forward.