Fact Checking
Well-Known Member
What about this disaster: Student Loans Owned and Securitized, Outstanding
Well, the key metric would be distressed debtors in serious delinquency, which appears to be dropping for student loans:
![transition_into_serious_delinquency_by_loan_type.jpg](https://i.investopedia.com/image/jpeg/1518825241244/transition_into_serious_delinquency_by_loan_type.jpg)
Which is not unexpected with record low unemployment.
The total rise in federal student loan debt would be normal with ~10 year loan terms. The rise began in early 2010:
![fredgraph.png](https://fred.stlouisfed.org/graph/fredgraph.png?dwnld=1&hires=1&type=image/png&bgcolor=%23e1e9f0&chart_type=line&drp=0&fo=open%20sans&graph_bgcolor=%23ffffff&height=450&mode=fred&recession_bars=on&txtcolor=%23444444&ts=12&tts=12&width=1168&nt=0&thu=0&trc=0&show_legend=yes&show_axis_titles=yes&show_tooltip=yes&id=TOTALGOV&scale=left&cosd=1989-12-30&coed=2018-08-29&line_color=%234572a7&link_values=false&line_style=solid&mark_type=none&mw=3&lw=2&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly%2C%20End%20of%20Period&fam=avg&fgst=lin&fgsnd=2009-06-01&line_index=1&transformation=lin&vintage_date=2018-11-13&revision_date=2018-11-13&nd=1977-01-01)
So I'd expect it to start leveling off in 2-3 years time.
Since these sums are owed to the federal government the recession risks are lower - there's no danger of a debt crisis spreading to the private sector.
So I'd not label it a 'disaster' - in fact I think these student loan debts should be largely forgiven for everyone who got a degree as a result - society is better off with more educated people.
Also, the debt financed undergraduate tuition system in the U.S. is a pretty blatant rip-off right now, which is essentially rent-seeking behavior on the backs of poorer students who often have no choice but to get a student loan.