Monthly Archives May 2013

The Student Loan Bubble Looks Awfully Like the Housing Crisis, Top Bankers Say

By Alec Liu

The US’s tepid economic recovery could become derailed by yet another bubble. This time it’s student loans, warned the Federal Advisory Council, a group of a dozen bankers who meet quarterly to advise the central bank. Guess what? It smells suspiciously like the housing crash that precipitated the Great Recession only half a decade ago.

The Federal Advisory Council noted that recent growth pushed student-loan debt levels to almost $1 trillion, which “now exceeds credit-card outstandings and has parallels to the housing crisis” Bloomberg News obtained documents last week of the February meetings through Freedom of Information Act requests. The trend has only continued...

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Student Loan Debt: How Much Is Too Much?

Column by (@adam_k_levin) , Credit.com

May 12, 2013

Some call it the Student Loan Bubble — I call it crazy. And what better time to discuss student debt insanity than now, as countless soon-to-be graduates prepare to slip on their caps and gowns? An estimated 1.8 million students are graduating this year, many with degrees that perhaps aren’t worth a damn when it comes to actually getting a job. Nevertheless, many of them will soon be paying back the tens or hundreds of thousands of dollars they borrowed to get those nice degrees, and I wonder how many will regret the decision to spend what they spent as they see their interest compound and principals skyrocket through cycles of deferment and forbearance...

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A better approach to student loans Washington Post Editorials, Published: May 5.2013

By Published: May 5

 STUDENT LOAN interest rates are going to double in July. And, no, that’s not nearly as terrible as it sounds.

Last year, President Obama promised to prevent such a scary-sounding outcome to whip up enthusiasm for his reelection campaign. In fact, only some rates were set to increase from 3.4 percent to 6.8 percent, and that would have been only on new loans, not existing ones. And even if certain rates had ratcheted up, the government still would have been giving students — risky borrowers, that is — a tremendous deal, and with very generous repayment terms to boot. Nevertheless, cowed lawmakers agreed to keep the lower rates in place for another year, cobbling together $6 billion to pay for it.

This year, the president is taking ...
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Economists: Student loan debt a concern, but is it next bubble?

Student loans are second-largest share of household debt

University of Iowa senior education major Molly Good (center) of Marion, Iowa, talks with graduate student financial counselor Sarah Lobb (left) and assistant director of student financial aid Sara Harrington (right) about her loan payment options during a meeting. (Jim Slosiarek/The Gazette)

That’s led to widespread speculation that student debt could be the economy’s next bubble — and the next bubble to burst — with comparisons to the housing market and dot-com bubbles, as well as to the growing number of auto loans.

But several economists and Iowa student loan officials said they believe the growing student debt, while troubling and having the potential to cause economic ripples, won’t be a bursting bubble that shak...

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Republicans’ near-term agenda: pipeline, student loan, debt bills May 3, 2013, 3:53 PM

House Republicans in May are planning to push legislation including bills that would speed construction of the Keystone XL pipeline, tie student loan interest rates to market rates for federal borrowing, and ensure that Treasury bondholders are paid if the U.S. hits the debt ceiling.

And, said House Majority Leader Eric Cantor in a memo to Republicans, while no date is locked in, “I expect that the House will vote on full repeal of Obamacare in the near future.”

“I expect the House to have a full legislative agenda in May,” Cantor said in the memo.

House and Senate lawmakers return on Monday from a week-long recess.

Republicans’ ambitions are clear on a variety of economic issues, but outlook for passage of these bills is less certain...

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Public vs. Private Student Loans: Why the Differences Matter to You

by Bruce Watson May 1st 2013 11:51AM
Now that college acceptance season is well under way, the time has come to get focused on the next harrowing step on the road from high school to the dorm: Paying for it. As hard as it is to get into the college of your dreams, financing four (or more) years there can be even more difficult. And just as the college and major you choose can have a huge impact on the rest of your life, the way you choose to pay for your education can mean the difference between a manageable post-college debt and a crushing burden that will dominate your financial life for years after graduation.

For decades, college tuitions have been rising steeply. In fact, measured in constant dollars, they’ve more than doubled in the last 25 years...

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