“Delinquency Is At Crisis Levels” – Student Loan Bubble Is About To Pop
by Tyler Durden
ZeroHedge.com
Fri, 10/26/2018
According to a new Bloomberg Report, the student debt crisis is about to take a turn for the worse, as the next generation of millennial graduates could be trapped in insurmountable debts.
Over the last decade, the federal student loan segment experienced an explosion in growth.
As the cost of college soars, the result is a widening default crisis that even Fed Chairman Jerome Powell recently warned: Burgeoning levels of student loan debt could slow down economic growth over time.
Millennials have frantically tapped into student loans, up almost 157% in cumulative growth over the decade. By comparison, Bloomberg notes that auto debt has grown by 52% while mortgage and credit card debt fell by 1%. Student Loans Owned and Securitized, Outstanding has breached the $1.5 trillion level under the Trump administration, making it the second largest household debt segment among all Americans, after mortgages.
Analysts warn that a perfect storm in the student loan bubble is brewing. They say student loans are being issued at unprecedented rates as millennials are conditioned to believe that higher education is the only way to get ahead. This comes at a time when tuition at both private and public institutions is at record levels, and interest rates on loans are surging to fresh cycle highs.
As the storm clouds gather, the next generation of graduates could default on their loans at even higher rates than today, which would ultimately form a turning point in the bubble and usher in a winter cycle.
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