The Moral Hazard of Student Loans

Student Debt

While the national debt continues to balloon, the student loan bubble is also reaching epic proportions.  Back in 2013, the amount of student debt held by Americans was approximately $1.2 trillion, and it has grown to $1.4 trillion today.  According to the Huffington Post, The figure stood at $730.7 billion (in 2009), and that amount is expected to double by early next year, despite the Obama administration’s successful efforts to increase the amount of grants available to students from low-income households.”

What the Huffington Post fails to understand is college tuition is far outpacing the meaningless grants provided.  The indebtedness has gotten so bad for college graduates that 30% would sell an organ to erase their student debt, and that’s just the beginning.  Duke University student Belle Knox gained national attention when she was outed as an adult movie star by a classmate.  When asked why she decided to get into pornography, Belle explained it was due to the high cost of her Duke tuition.

Some experts think that the student loan debt could increase to a whopping $3.3 trillion by 2024, but they are assuming that bubbles grow forever.  We learned from the housing bubble that prices do not go up forever, and student loans won’t be any different.  To be sure that the student loan bubble may be on its final legs, look no further than the growing movement to even forgive student debt.

If loan forgiveness is successful, the moral hazard created would cause universities to charge as much as they want because, why not, it’s the American taxpayer who is on the hook.  The only upside to this plan is that maybe Americans will finally wake up to the scam, and the student loan bubble will implode.  Let’s hope this happens soon before you and I have even more stolen from our paychecks.