RE: Such a crash would be a good thing for this country.
What about:
1) Graduates who have not paid off their loans?
2) The financial institutions who loaned them the money?
The National student loan debt is now $1.2 Trillion total.
According to the US Dept. of Education, The three-year cohort default rate rose from 13.4 percent for FY 2009 to 14.7 percent for FY 2010.
SEE HERE:
http://www.ed.gov/news/press-releases/default-rates-continue-rise-federal-student-loans
We are now heading towards the 16% default rate.
16% of 1.2 trillion is : $192 Billion !! ( Nearly $200 Billion ).
Are we going to spend another $200 Billion to rescue financial institutions?
I believe the education debt bubble will turn out like sub-prime much more than people realize.
The simplistic, emotive narrative is that its all about “education” (how wonderful!) just like the previous bubble was all about “housing for everyone” (also how wonderful!)
Like the housing bubble, I bet we will see that 1) normal people who behaved prudently will generally not be hurt, 2) many of the loans taken will wind up involving some kind of fraud, 3) the institutions that peddled them will get little sympathy and should wind up going broke, and 4) it will cost the taxpayers a sh**load of money via stupid, political government involvement.
Its better it burst now, than just get bigger and worse in the future.