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This post is very important to read, especially for first year students that enter into college. Many students do not understand the obligations of student loans, and end up in over their heads. I don’t think that getting a loan to pay for college is bad. I think being responsible with the money is the key.

Alan Collinge

The only way to contain costs is to force the oversight authority for the loans which fuel this industry to take their responsibility to ensure that the schools offer quality educations at low cost seriously.

This will never happen as long as the Department of Education is actally making, not losing money on defaults. The only meaningful way to make this happen is to restore the consumer protections which have enabled this predatory and perverse lending model to survive and thrive.

So at a minimum, standard bankruptcy protections must be returned to these loans, and if this does not occur, then society will simply write off these loans as a huge national joke, and justifiably so. And the author is right that it won't take ten years. By my best estimate, the current default rate is well over thirty percent, and is probably closer to forty percent. At what "critical mass" will an "en-masse rejection" occur I do not know, but I suspect that we will be knocking on the door at fifty percent...this could be 6 months from now, or it could be a few years off. Certainly less than 5 years, though...and as most predictions I have made for this industry, I suspect it will come far sooner than we may think.

Jeff W

Hi Lloyd,
Thanks for posting these telling graphs on the state of higher education. I think the rise in student loans vs. the decline in total loans is particularly interesting. I will be sure to check out the whole report (although I appreciate you featuring the highlights here!)

I also really appreciate your optimism regarding higher education and strategies to contain costs over the next 10 years.


PS - I also "digged" this!

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