College Tuition Boom

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The Boom The Boom of the college tuition bubble saw a visible increase in price due to massive demand and expanded credit, as caused by the Displacement demonstrated above. Students are investing more and more in college hoping for an advantage because of their degrees and many jobs require some level of postsecondary education, making the investment seem necessary. The demand increase for college becomes visible through the statistics of student loan debt. College Board’s Trends in Student Aid states that 10% of people graduating in 2007-8 had loans over $40,000. The Project on Student Debt discloses that 206,000 graduated from college in 2008 with more than $40,000 loan debt, a ninefold increase from 1996. Outstanding student debt has tripled in the past ten years, increasing from $363 billion to more than $1.3 trillion. Seven of ten students graduate from college with debt, exceeding credit card and auto loan debt combined. Currently, over 40 million people hold debt from their student loans, and annual …show more content…

The easy access to credit originated both from government programs encouraging loans, and changes to bankruptcy law. Since 1998, students can no longer discharge federal loans through bankruptcy, and in 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act also protects private student loans. This protection makes student loans profitable and low-risk to providers, as they must be paid back. Stephen Burd, a senior research fellow at the New America Education Policy Program, called the protection as a “blank check to lenders” by the government saying “charge whatever interest rates you want and we’ll make sure that borrowers will have to repay you.” Loans, much like during the housing bubble, are granted regardless of ability to pay and without much risk as the debt carries until

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