Will the College Tuition bubble burst during Trump's Presidency?

https://fred.stlouisfed.org/series/FGCCSLQ027S Default rates are down, but since 2010 the amount of money being repaid has halved. What will happen if the 44 million borrowers who owe $1.3 trillion cannot repay their loans?Could a correction in the cost of college degrees cause another financial crisis?

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All sorts of problems and risks attend higher education in the US and the Trump era will likely make matters worse. For example, the anti-immigrant, anti-Moslem, etc. noise from Trump administrators is already turning foreign students away from US colleges and universities. This is serious because over the last 20 years, foreign students' payments of tuition and other fees/costs at US institutions have become much, much more important for their financial viability. For another example, declining quantities, qualities, and pay scales for US jobs are leading ever more US high school graduates to question whether college makes sense for them financially. Rising interest rates make that problem worse, and likewise moves to reprivatize student loans will do that too. Major defaults of current student loans will drive lenders to compensate by raising loan rates and thus college costs for borrowing students. Lastly (and there are many more examples), fiscally strapped states will continue to cut allocations to public colleges and universities exascerbating all the above problems.


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  • responded with submitted 2017-01-02 13:31:22 -0500
  • published this page in Ask Prof. Wolff 2017-01-02 01:43:57 -0500

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