Is the next bubble student loans?

[¿Que?]

I'm asking based on a hunch, rather than any massive empirical evidence. I work/study at a school that keeps increasing enrollment numbers. Ironically, tuition also increases. And also ironically, I get paid very little (although the job itself is also not very demanding). I am paying for school with loans, and I'd imagine, so are many other student.

Is this increasing enrollment and increasing tuition typical of American schools right now? How much do student loans factor into the overall economy of the country? If more people become educated, and job growth remains low, won't the market be flooded with highly educated people with a lot of debt that can't pay it off. Sort of how a liberal arts major doesn't get you shit anymore, since there may be say 1 job for every 100 qualified candidates (I just made up the figure).

[Devrim]

It could well play a role. You would need to look at some statistics about, for example, the size of the debt in total and how much of it is 'risky' before drawing any conclusions though.

Devrim

[Havet]

The next bubble is going to be renewable energies and all its derivative forms: fuel, ecologic products/services, transportation, materials, even food.

I expect it to burst somewhere between 2020-2025, if not sooner, given the HUGE investment by governments and the private sector as well.

[RGacky3]

The next bubble is going to be renewable energies and all its derivative forms: fuel, ecologic products/services, transportation, materials, even food.

I expect it to burst somewhere between 2020-2025, if not sooner, given the HUGE investment by governments and the private sector as well.

I doubt it, considering this stuff is infastructure and not based on risky loans and speculation. Bubbles are caused by what ammounts to loan sharking and speculation.

[El Rojo]

unis have been massivly shifted to a market logic, with vice chancellor on executive pay, increases in casual contracts ect, so this would be a likely progression

[Vladimir Innit Lenin]

In short, no. I'd not say student loans will be a bubble, but it will certainly play a fairly direct role in whichever the next bubble is. Although, with the privatisation of education in the UK, this could very well turn into a bubble of its own, though I doubt the education market here would 'crash', per se. It would more likely become isolated from the 'real economy' and have a knock on effect - i.e. too much debt for students in the next 20 years feeding into other areas of the economy (slow-down in spending, credit ratings affected etc.) and lead to a debt-fuelled crash, when the credit system collapses again.

[RGacky3]

Its not just the actual loans, what is likely to happen is the same that happened with the housing market, the loans being bundled and sold off as securities alond with other investments, being sold as solid investments (assuming the kids will get jobs and pay back the loans, or just by buying off rating agencies to make them look solid), and then when the kids default on their loans because the job market sucks those securities collapse and no one gets their money.

Also when they DO collapse chances are the value of the securities involving student loans will be WAY WAY inflated, because the value of the loans will be based on speculation (i.e. I'll buy this security and then it will go up in value and I'll sell it for a profit), it will be based on speculation because thats ALWAYS what happens in a market, people want to make a profit.

Then what will happen is banks will start to insure those securities (i.e. bet against them) WHILE selling them off, so that way they'll be collecting no matter what while screwing both the student AND the investor, at that point it will vastly in their interest to make it impossible for the student to pay back the loan, further forwarding the inevitable, it being, the poping of the bubble.

A few people will get really rich, a lot of people will get screwed, and when it happens the president at the time will have to shell out a bunch of money (mainly to the rich and the ruling class that were not on the winning end of the deal) to keep the system going so that the same damn thing can happen again. Meanwhile millions more unemployed, broke, and homeless, this is Capitalism.

[¿Que?]

Meanwhile millions more unemployed, broke, and homeless, this is Capitalism.

Don't forget, and in debt too. I know this is sort of implicit in what you said in the quote, I just wanted to make it explicit.

[Havet]

I doubt it, considering this stuff is infastructure and not based on risky loans and speculation. Bubbles are caused by what ammounts to loan sharking and speculation.

History will correct me. If not, I stand corrected.

[Conquer or Die]

This is somewhat related: http://www.ultrinsic.com/

Students spending loan money on bets to pay back their investment at a higher rate and then failing thus resorting to loan sharks to pay off more immediate debts to restart the casino.

To be honest, however, significant institutional and individual methods of cutting fat can be done which is eventually why the textbook industry will be annihilated in the next five or so years. In addition there will be an influx of government and private programs designed to relieve debt by bilking graduates out of their twenties and probably thirties.

[Amphictyonis]

I'm asking based on a hunch, rather than any massive empirical evidence. I work/study at a school that keeps increasing enrollment numbers. Ironically, tuition also increases. And also ironically, I get paid very little (although the job itself is also not very demanding). I am paying for school with loans, and I'd imagine, so are many other student.

Is this increasing enrollment and increasing tuition typical of American schools right now? How much do student loans factor into the overall economy of the country? If more people become educated, and job growth remains low, won't the market be flooded with highly educated people with a lot of debt that can't pay it off. Sort of how a liberal arts major doesn't get you shit anymore, since there may be say 1 job for every 100 qualified candidates (I just made up the figure).

Economic bubbles need to create monetary gain for people other than banks. Student loans won't create jobs. There will be no "student loan bubble". There may be a small scale crisis when students cannot pay the loans back (because there's no jobs).

I wouldn't consider some bankrupt banks a crisis. The crisis is millions of people out of work. Hell, the crisis is capitalism. I want to move to a communist planet.

[RGacky3]

I wouldn't consider some bankrupt banks a crisis.

Do you know what happens when banks go bankrupt? the economy collapses.

Economic bubbles need to create monetary gain for people other than banks.

No they don't they only need inflated value, also read my post, banks don't just keep those loans and get hte money back, they rent them out, make derivatives on them and insure them, creating whole new markets.

[ryacku]

My opinion is that the next bubble will be 401ks. Think about it, hundreds of millions putting money into the stock market. When they retire, stock prices will slowly go down at first, and then, when they are afraid they might lose their investment, they might start withdrawing enmasse.