Student loan bubble: Not as bad as it looks

Here’s a scary headline from yesterday: “Student loans soar 275% over past decade.” It’s true, the Motley Fool reports. Total student loans outstanding were $241 billion in 2002. Today, it’s $904 billion, and it shows no sign of slowing down. “Student loans could be the next housing bubble,” former Labor Secretary Robert Reich said in March. He may very well be right, but there’s another side to this story. Yes, total student loans have surged over the past decade. But what else happened during that time? The number of students enrolled in colleges jumped 40%. The rise in college attendance has been ongoing for decades, but really spiked in recent years — particularly among graduate students. As the jobs market dove in 2008, armies of recent college graduates ran to grad school in lieu of an employment market that had no room for them. In 2009, the number of people taking the LSAT (law school entrance) exam jumped 20% from the year before. The number taking the GRE (standard grad school entrance) exam popped 13% last year. “When job creation slows, there’s an increase in the number of people who pursue a graduate degree,” The New York Times reported two years ago…

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Student loans: The next bubble?

First the dot.coms popped, then mortgages. Are student loans and higher education the next bubble, the latest investment craze inflating on borrowed money and misplaced faith it can never go bad? Some experts have raised the possibility, the Associated Press reports. Last summer, Moody’s Analytics pronounced fears of an education spending bubble “not without merit.” Last spring, investor and PayPal founder Peter Thiel called attention to his claims of an education bubble by awarding two dozen young entrepreneurs $100,000 each NOT to attend college. Recent weeks have seen another spate of “bubble” headlines–student loan defaults up, tuition rising another 8.3 percent this year and finally, out Thursday, a new report estimating that average student debt for borrowers from the college class of 2010 has passed $25,000. And all that on top of a multi-year slump in the job-market for new college graduates…

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