by Dr. Boyce Watkins
In the last few years, the cost of college has gotten out of control and student loan debt has skyrocketed along with it. Outstanding student loan balances have risen to $956 billion, which is a 4.6% increase over the previous quarter. Also notable is that student loan debt, unlike credit card debt and mortgages, cannot be discharged in the event of a bankruptcy.
The government is arguably doing a good thing by increasing the availability of student loans. But increased availability of these loans leads to rapid increases in university spending, largely because many students can afford to pay a tuition bill that might not have been affordable otherwise. The same thing happened in the housing market just a few years ago, since increased availability of financing is an easy path to inflation.