Expansion of credit available to fund a particular product or service, with no regard for credit risk and no free market forces, will simply result in higher prices. To find the reason for increasing tuition prices, look no further than the explosion in student loans.

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[–]magnora7 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (3 children)

Most of it is already government-owned though, like 95%. So that whole industry is already "bailed-out" pre-emptively, so I'm not sure how the crash would initiate there. Even if the default rate skyrocketed, I'm not sure if it'd impact any other markets because the risk has already been absorbed by the government.

I'm sure it'll contribute though, as will the housing market. I think the stock market will be what triggers it though. Or maybe USD hyperinflation because of the end of the petrodollar hegemony, but they seem to have been able to absorb that so far

[–]Tom_Bombadil 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (2 children)

The housing bubble crashed when people who were forced to choose between paying their mortgage or paying almost $5/gal on gas for work.

(https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp)

As of June 2016, American students were on the hook for approximately $1.3 trillion in student loans. The average borrower owed between $25,000 and $35,000, up significantly from past decades..

Student debt is the new gas.

[–]magnora7 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

Interesting. But I think almost everyone will stop paying their student loans way before they will stop paying their mortgage

[–]Tom_Bombadil 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (0 children)

Over one million people have already defaulted.

Hopefully, they were approved for their mortgage before they defaulted on their student loan. This is an improbable scenario.