Could Student Loans be the Next Housing Bubble?

5 years 6 months 1 week ago August 17, 2011 Aug 17, 2011 Wednesday, August 17 2011 Wednesday, August 17, 2011 4:12:00 AM CDT in News
By: Christie Nicks
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COLUMBIA- It's such a vicious cycle- the job market is slow...which makes people want to go back to school to make themselves look more appealing to employers... but then tuition rates are also up, forcing more students to take out more loans in order to pay for their education. But with rising tuition rates, a soft job market and low graduation rates- Moody's Analytics, a credit rating firm, has a bleak forcast for whether students will actually be able to pay back their loans.

     So now the new fear... could student loans become the next housing crisis? Tuition increases have climbed steadily higher than housing increases when comparing the two. Moody's also reports that even during the housing bubble where real estate grew in cost, the tuition growth rate exceeded the real estate rate.

     An indication of this sort of student education bubble starting to form, is that student loan delinquencies (falling behind on loan payments) have increased... The only other deliquency rate that's higher than the student loan rate is from credit cards which is actually dropping.

 

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