Next Debt Bomb: Student Loans?

With student loan debts soaring to $867 billion last year, student debt is a "bomb" waiting to explode, bankruptcy lawyers tell the Washington Post. The figure is bigger than the $704 billion owed by all Americans on their credit cards, and of the 37 million borrowers, 14.4% have at least one past-due account. “This could very well be the next debt bomb for the US economy,” said the head of the National Association of Consumer Bankruptcy Attorneys—a potential bomb the Post compares to the "housing mortgage loan crisis." Of course, the lawyer clarifies that "student loan defaults are not going to have the same ripple effect through the economy that mortgage defaults did." His belief: "Our best and brightest won’t necessarily get the education that they need to move us forward" because they'll decide not to take loans in the first place.

"Hyperbolic nonsense," is Dean Baker's response to the article at Business Insider. Baker argues that it is ridiculous to compare the $867 billion student debt market to the truly massive national housing market, which at its peak was 25 times larger—at $22 trillion—and has since lost $8 trillion in value. "This is like comparing every atrocity to the Holocaust," writes Baker."It makes no sense to compare this situation to the housing bubble; there is no relationship." (More student debt stories.)