POP-- Goes The Student Loan Bubble!

I was listening to a podcast yesterday about the state of the job market, and the commentators started lamenting the fact that so many new college graduates are unable to find employment.  Meanwhile, tuition costs continue to accelerate upwards, and student loan payments are ballooning.  They cited a figure that young people owe upwards of a trillion dollars to lenders, for student loans that are super easy to get. Meanwhile there is a shortfall in semi-skilled workers-electricians, plumbers, and welders.
When my parents were growing up, a college degree was key the key to securing gainful, high paying employment.  You could "bank" on it.
"Why I see here you have a college degree, I'm sure we can find a place for you."
This is no longer the case. I have many friends who majored in liberal arts who have had great difficulty getting jobs since graduating.  Meanwhile their over-priced education has left them mired in debt, and even those with mediocre to decent paying jobs, have a hard time affording dinner and a movie, much less purchasing a new car, or putting a down payment on a house. That's okay though, they couldn't get a loan for that anyways.

Video: How to identify bubbles

While yearly tuition costs continue to soar at rates higher than inflation, and joblessness amongst college graduates grows, the thought came to my mind, "Is this another bubble?"
Ready, Set- Pop!

College for me was invaluable because it taught me to think critically, as well improving my ability to communicate and write , but I have always created my own employment, and the degree I have is worth only the piece of paper it's written on, maybe a tad more if you count dating.
But while college used to be a fantastic investment, and this still likely holds true if you major in the hard sciences, although my friend Jeremy and his bachelors in materials science from UCLA are currently employed as a full time fitness trainer at my gym, I don't believe that the college degree returns the same bang for the buck as it used to.
Not only does the investment have a lower probability of success, defined as finding a good paying job afterwards, its costs are spiraling up each year as colleges raise tuition.
Why do they raise it each year? Because they can! Because every decent parent wants a better life for their child, and our society has unquestioningly accepted that college is the best/ if not the only avenue to achieve this goal. The demand curve for a college degree is seemingly inelastic, as people will pay any price for what they believe is necessary for a "better life."
Today, If I graduate from school with $100,000 in debt, and my buddy who I went to high school with has been an electrician for four years, and will be earning let's say only slightly less money than me, (let's be optimistic) already has $40,000 in savings. Which of us made the better investment? How long will it take me to catch him?

It used to be that when you graduated, yeah, you had some student debt, but it was manageable. As tuition costs soar, at some point, unless some new "internet like" technology magically expands the job market with high paying employment, debt will become so onerous, that more and more people will simply be unable to pay,  or simply fall into wage slavery. So why do banks make what they must know at this point to be risky loans- government guarantees of payment, plus laws such as declaring bankruptcy doesn't wipe out your student loan.

And guess what, when risk is taken out on one side of the equation, it creates artificial demand, spiraling tuition costs higher, enabling the deans to grant themselves yearly raises, until 18 year olds and parents eventually start scratching their heads and saying, "maybe this isn't such a great investment."
And when this bubble of implodes, and students from the diploma mills are unable to pay their Mt Everest pile of debt, who is going to be left holding the bag? Why, the taxpayer of course!


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