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A Looming Financial Crisis?


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Jun 10, 2018

A Looming Financial Crisis?

Federally-owned student debt has steadily increased since 2008 from only 5% of the total debt in the average household to 30%. If you compare the rate of student loan costs to average national income, the student loan amounts have increase four times more than the national income has increased.

Some other numbers show that this is not due to an increase in college enrollment: from 2008 to 2015, college enrollment rates only from 16.4 million to 17 million (4%). And the average tuition rate at a public university only rose from $7,280 to $9,970 from the 2007-2008 school year to 2017-2018. What has changed, is the rate at which people are taking out student loans from the federal government. One theory proposes that after the 2008 financial crisis, families needed to take out federal loans for their own education or for their children's at a higher rate than they would have needed to pre-2008. At times, "student loan payments are now a source of revenue for the government," making it unlikely that they will embrace loan forgiveness or other policy options that would relieve the economy in this area. Do you believe these trends will continue to grow potentially become the next financial crisis?


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