The student loan bubble is starting to burst

[Seraphim]

Depends.

I'm 109k in debt and I'm 25 but the debt is on a home that is currently worth 50% more than the mortgage liability. Even an epic housing market crash here in Canada would leave me about even IF I were to sell at the brutal trough.

Bought the place 3 years ago thinking the housing marking was about 10% overvalued and the market has gone up 22% since the purchase.

Debt is about usage and value. As of now if you take valuations and debt at face value I've saved (through expedited mort. payements) and made (through appreciation) just over 50,000$ in 35 months.

120k for a watered down arts degree is crazy, though.

Debt is all about usage.

You mean $120,000 in debt at 22 years old is a bad thing?

 

[malkusm]

I think the top-tier schools could still command the current tuition rates on certain programs even in the face of the student loan bubble popping. The same goes for good technical schools, engineering programs, and so forth. But, that's because an efficient market for higher education would have prices driven by expected future earning potential, which is present for these sorts of programs. Such a market would eradicate the hundreds of middling liberal arts schools which are charging $40K per year in tuition to build new state-of-the-art campus community centers. Some of those schools would still exist (the market would clear so that only the most worthy schools would remain) but they would need to charge drastically reduced tuition rates to reflect the economic value of the degree.

Unfortunately, I am under no pretense that this is what will actually happen.