The student loan debt crisis in America is the next bubble to pop. Except it will be that creepy sound you get when you hold the neck of the balloon and let out the air slowly. Because unlike other bubbles, this one is gradual and truly awful sounding. The collapse is due to the increasing number of Americans who can no longer make their loan payments. Over 1 million defaulted in 2016. Of the total $1.3 trillion owed by 40+ million Americans, 10% of those loans went unpaid for months.
What will happen? Since you can’t bankrupt yourself out of this magical debt, the government will use whatever resources it wants to get it from you. Start with garnishing your wages, then dream from there.
But the government is here is to fix it. After causing the educational inflation bubble, subsidizing college tuitions (along with the colleges getting fat too) leading to 500% tuition increases since1986 and climbing, here’s their solution: give us your house.
To be specific, Fannie Mae and its subsidiaries, are offering you the golden opportunity to take out a home equity loan to pay your student loan. That anyone has equity left at all after crash the government caused in 2008 is amazing.
Now you get to turn your student loan—secured by your body—into a loan secured by your home. So instead of the messy problem of the government trying take their pound of flesh every month for the rest of your life, they can just take your house instead. Or your parents’ house.
They are making it more convenient for Americans to bring themselves to even more financial doom.
If you have these problems, you need to start your own bank. There are ways to dig yourself out, or at least do better. There are no easy or magic answers. Following the advice of the government and their crony banker friends will only lead to your destruction.