Via: HealthcareAdministration.com
Friday, October 14, 2011
Education bubble: WOW
One indication of a bubble is a big increase in debt financing. Using this metric, we are in a huge education bubble. This infographic takes time to go through, but I was shocked at the amount of debt students take on, the default rates on student loans, and students' inability to use bankruptcy to get out of debt.
Via: HealthcareAdministration.com
Via: HealthcareAdministration.com
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I have a friend who graduated with a MS from Harvard, and was working on a 2nd MS in nursing at Vanderbilt, but succumbed to mental illness which unfortunately runs in her family.
ReplyDeleteNow she can't hold a job, and is buried, probably for life, in debt she can't repay, and will never go away.
I understand the need to minimize moral hazard in student loans. But the "rational actor" model breaks down when the decision to be rational is taken away from you.
Plus, the streets in Wall Street are rather crowded these days with young people who took on student loans, and then graduated into an economy with an unprecedented shortfall of aggregate demand and no hopes of getting a job or paying off their debts.
If I could make one criticism of the EMBA program, it's that they forced us to read Thomas Friedman, and didn't force us to read Nassim Nicholas Taleb. Reading Friedman actually makes you dumber. Reading Taleb gave me a humbling grasp of the power that luck (or lack thereof) has in shaping your life.
My friend, and a distinct subset of the people on Wall Street, didn't do anything wrong. They worked hard, sacrificed, and still lost it all. Simply because of bad luck.
The student loan model (among other things) needs to be rewritten, hurridly, to better handle cases like these.
nice post; very poignant.
ReplyDeleteI do want to point out that if you define the problem as a "lack of aggregate demand," then Keynesian stimulus surely follows.
best, Luke