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Mar 28, 2012 05:44 PM EDT

Crown Warns of Next Economic Bubble: Student Loans


ATLANTA, March 28, 2012 /PRNewswire-USNewswire/ -- Collapsing bubbles in recent years have taken a toll on the U.S. economy, noted Crown CEO Chuck Bentley, from Internet start ups to the housing market. But for parents and students preparing for college right now with loan applications and college entrance exams, it is important to stop and consider what Crown warns will be the next big bubble: Student Loans.

Approximately one trillion dollars of debt already exists among the relatively small number of borrowers, 36,000,000 college alumni. But with the tightening job market, repayment problems and defaults are going to intensify. In the last few days, ABC News reported that for the first time in history, student loan debt had eclipsed credit card debt.

"You can't short-sell a college education," said Bentley. "Parents and students are taking on tremendous debt right now in pursuit of future careers that may not provide the income to match the loan payments."

Recently, President Barack Obama put forward a plan targeted toward those with student loans - which essentially encourages more student loan borrowing without addressing the real problem.

"The president's plan will provide less than an average of $10 a month relief for students, but that is a drop in the bucket. Students will own the kind of debt that can swallow up all the resources needed to begin their life," said Bentley, who noted that part of the problem was the undisciplined, continued expansion of college costs riding on the back of the student borrowers.

"How is it that when almost every other sector of the economy is scaling back expenses, costs at public universities have risen 8% a year? A good question for parents and students to ask themselves is whether they are getting the best value for the costs," said Bentley.

Source: Crown

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Provided by Society for Industrial and Applied Mathematics

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