Thursday, August 18, 2011

The Next Financial Crisis?

Instapundit has had a meme for awhile relating to the rapidly rising costs of higher education. The more I read about it, the more I'm starting to think he might be on to something.

Other people are starting to see this also. From The Atlantic:
The next sub-prime crisis will come from defaults on student debts, starting with for-profit colleges and rising to the Ivy League. The parallels with housing are striking. In both, the written warnings aren't understood, especially on penalties and interest rates. And in both, it's assumed that what's being bought will rise in value, in one case the real estate, in the other the salaries which will accrue with a degree. One bubble has burst; the second is already losing air.
Read the whole thing. Colleges can't keep this rate of tuition increases up for much longer. Since the government has taken over student loans, I'm not sure what that means upon massive defaults.

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