Student Loan Bubble To Exceed $1 Trillion: "It's Going To Create A Generation Of Wage Slavery" And Another Taxpayer Bailout

Tyler Durden's picture

First, this is the total amount of student debt in real time:



While one of the biggest complaints of #OccupyWallStreet protesters, and much of the balance of middle-class America, continues to be the burden of student loans, the paradox is that, as the USA Today reports once again on one of its favorite subjects, student loans are set to surpass $1 trillion in total notional for the first time in history on what appears to be relentless demand and interest for this cheap form of educational financing, making this debt burden the single largest form of consumer debt, well bigger than outstanding credit card debt, and smaller only compared to mortgage debt. "The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York. Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what's owed on home loans and credit cards." What explains this insatiable demand for this kind of debt? Well, it's cheap, it's easily accessible (the collateral is education), and it is fungible - a student can take out a loan, yet use part or all of the balance for tangential purchases (that iPhone 4S sure would make me cool). But this, like every other debt, comes at a price.

Per USA Today:

Taxpayers and other lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can't be shed in bankruptcy.


The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.


"Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children," says Mark Kantrowitz, publisher of

Naturally, just like in the credit bubble days, when NINJA loans were fast and furious, the lines in front of banks stretched around the block. Banks may or may not have known that the loans would be repaid, but nobody pressured borrowers to live in that big McMansion that "demanded" $1 down and a 99.9% LTV. Sure enough, when the day of reckoning comes, it is never the fault of the person who probably should have shown some restraint, but no: after all everyone else is doing it.

Well, it is the same thing now. And with generations of people indoctrinated that only those with a college degree can be successful, it is only obvious that student debt is now the next big bubble.

"It's going to create a generation of wage slavery," says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.


Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What's happening:

Granted, unlike with the mortgage bubble collapse, this time we know, as Zero Hedge reported earlier in the week, that everyone is on the fraud. We quote from "The Fraud At The Heart Of Student Lending Exposed - The One Sentence Everyone Should Read"

A key reason why a preponderance of the population is fascinated with the student loan market is that as USA Today reported in a landmark piece last year, it is now bigger than ever the credit card market. And as the monthly consumer debt update from the Fed reminds us, the primary source of funding is none other than the US government. To many, this market has become the biggest credit bubble in America. Why do we make a big deal out of this? Because as Bloomberg reported last night, we now have prima facie evidence that the student loan market is not only an epic bubble, but it is also the next subprime! To wit: "Vince Sampson, president, Education Finance Council, said during a panel at the IMN ABS East Conference in Miami Monday that lenders are no longer pushing loans to people who can’t afford them." Re-read the last sentence as many times as necessary for it to sink in. Yes: just like before lenders were "pushing loans to people who can't afford them" which became the reason for the subprime bubble which has since spread to prime, but was missing the actual confirmation from authorities of just this action, this time around we have actual confirmation that student loans are being actually peddled to people who can not afford them. And with the government a primary source of lending, we will be lucky if tears is all this ends in.

So... debtors know it's a bubble, lenders know it's a bubble, everyone knows it's a bubble, yet it is growing faster now than ever before.

If nothing this is a fantastic exercise in observing a slow at first, then fast-motion train wreck from the side. It is without a shadow of a doubt, that not only will the student debt bubble pop, but writedowns on amounts outstanding will be massive, potentially resulting in another hit of 50% to total notionals, or about $500 billion. And since the borrowers will be fully tapped out, and the lenders will plead ignorance, and control the regulators and administration any way, is there any doubt who will once again be forced to pay for this upcoming bail out? This is something that does not require a college degree to figure out...

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afdestruction's picture

Mitochondrial Eve was most likely from East everybody has some African blood if you want to get technical, guy

fuu's picture

He clings to his Neanderthal blood to set him apart.

Use of Weapons's picture

Smart comment that only trogs junked.



bob_dabolina's picture

I can get techincal. We all techincally came from frogs. That doesn't mean we are frogs. 

White people are more evolved than black people. 

Look at intelligence for example. There is proof that whites and asians are more intelligent than blacks. It's been proven.

Blacks need to be taken care of. I mean can you tell me otherwise?

Is anything I've said not accurate?

Fukushima Sam's picture

Who is writing the tests? ;-)

bob_dabolina's picture

That's long reading....should take at least a full day to read it all and understand it.

Take notes.

Once you've read everything take a look at the world....fuck it, take a look at the world anyway.

bob_dabolina's picture

I feel for you...not being white/asian sucks. You just don't have "it" as in a brain capable of rational thought.

...keep studying, you might get there one day.

Schmuck Raker's picture

Is it rational to assume that I'm not white or asian because I called you a moron?

bob_dabolina's picture

What's your purpose in responding to me? 

Do you have a point to make or what?

Or do you just want my attention?

bob_dabolina's picture

So you wanted my attention...

Hi...I hate you, but you're probably used to that coming from your parents.

saiybat's picture

Congratulations. Mongoloids are smarter than the combined white race. The only thing this proves is that you're a bigot. I.Q. tests are the product of Francis Galton, an inbred eugenicist and believe me he wanted the see the likes of you exterminated.

10  Mongolia  
wombats's picture

If you are from France you most certainly are af frog.

Use of Weapons's picture

. <------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



That's you missing the modern world. Hint: Africa is bigger than the US, and has a lot more to it than mud huts, malaria and poverty. Kinda like using Gary, Indiana as an example of 'wut US is raly like, kk?'


Oh - and your IQ ain't looking so shiny here, and there's a hot bed of sharky predators who use this site. Top tip: don't let them give you any investing advice, esp. if they're taking your money. You'll end up gang-banged faster than a black woman serving whites in a cotton plantation. (Wait - you miss that bit of history?)

Ponzi Unit's picture

Then the joos will take of you, Bob.

tmosley's picture

You can't be more or less "evolved", dumb shit.  

There is "proof" that English are more intelligent than Irish, but their bloodlines are hardly any different.  It's a matter of socio-economics, which is clearly a subject that is above your head.  Hell, Arabs and Jews have almost exactly the same blood.  But there is a very real and clear difference between IQs in the two populations, simply because one is dirt poor and places reletively little cultural value on education, while the the other is rich, and places huge emphasis on knowledge and education starting at a young age.

Perhaps you should and Trav should start a White Pity Party.

bob_dabolina's picture

We would be too successful....we would have protesters all up in our business complaining about how successful we were. 

We would be sued and investigated for being overly successful.

*infinite volatility forever and ever; silver @ $0 but also at forever and ever.

Have you come up with any price targets yet? It's only been a year of you talking shit.

bob_dabolina's picture

You know what you are? You're that fuckin' thing stuck to my dingleberry. It's like that piece of know what I'm talking about.

There's no purpose for it but it's an irritant none the less.

fuu's picture

I have no idea wtf you are talking about really. Glad to know I am returning the favor though.

bob_dabolina's picture

Do you get paid by the hour for that kind of originality?

Mr Kurtz's picture

Here is some free sartorial and literary advice, mein herr. A gentlemen always tucks is brown shirt into his trousers when coming on this site and leaves any writings of Houston Chamberlain and Arthur de Gobineau back where he found them...on the outhouse floor.

tmosley's picture

Yeah, because weak little whiners like you who go on and on about race are all highly successful individuals who have much more important things to do.


bob_dabolina's picture

Nice one!

How bout' that silver call by December? Ya know....price and shit


didn't think so....never talk shit again you fuckin' pussy. 

* I have this saved that you won't make a call*

Alvaro de Esteban's picture

As all europeans and have DNA that comes from Africa  ( well, I know that  supremacists are trying to play the Mesopotamian option, so they prefer to be Adhmadinejad cousins) we have only left the ape looking. So, i.e., who resembles more an ape, Sarah Palin or Halle Berry?

GrinandBearit's picture

Don't forget... Halle's momma is white.

The blend (more often than not) does create some lovely creatures.


fonestar's picture

Kelis is even hotter though

Audit the beaver's picture

Sarah Palin

Michelle Obama


This is the right comparison.  Now given those two options who would you fuck?  Fiesty hockey mom with a fat ass, or a WNBA power forward with an iron jaw?

john39's picture

the smart bet is that michelle would do you.

SilverRhino's picture

Sarah Palin has a fat ass????   Think I'll take that over your Wookie WNBA power forward with the butt two axe handles wide and teeth that look like she could bite the Terminator's dick off.

tmosley's picture

I like how you are so stupid that you think that the only reason anyone would disagree with you is because they are black.

Funny, because that puts a lot of blacks as avid readers of a high level economics blog, which creates a contradiction in your thesis.

bob_dabolina's picture

Funny...what's that silver prediction?


fonestar's picture

Haha... even all of the white supremacists have gone multicultural.  Now accepting irishmen, slavs, croats, bulgars, etc, etc.....

Chuck Walla's picture

After 50 years and 1 trillion dollars for the War on Poverty, why is it there any left that need support?

LawsofPhysics's picture

Well its nice to have a fraud that we can "all agree on".  Nice.

redpill's picture

"Fraud you can believe in" is the preferred terminology, Dude.

kaicayman's picture

I though part of the whole college experience was getting into debt and learning how to stay there. <sarc off>

krispkritter's picture

You get a degree in 'Debt Slavery 101' before you even take the first class... These days it's enough that I pay for Public Schools that are f'ing worthless in my opinion. Kids are graded by Satisfactory, 'Needs Improvement', Unsatisfactory. I had A-F and if I got F's my ass was red for at least a day. Wouldn't want to hurt the feelings of the failing kids nowadays...and in my experience, the first year of college is a re-hash of crap they have in HS.

Chuck Walla's picture

Don't for get those Dream Acts! You get to pay your kids tuition AND the tuition of his illegal competition so the illegal can train for jobs he cannot legally hold in the United States.

Bansters-in-my- feces's picture

Don't worry...

The USAGovt will pick up the tab with Libya's gold.

I hear the fucking Killer Terrosist USAGovt got thier man.\

Seems NOT using the Federal Reserve banking system is harmful to your health.


Lndmvr's picture

My little town in Iowa has decided that if you show a gun then they can determine you are going to use it. And we have open carry law here. We're all terrorists.

Use of Weapons's picture

Libya's gold is being used to under-write the ESFTBO rescue plan, and as such is not available.