Tag Archives: debt crash

US College Loan Debt Bubble is at Dangerous Levels

Economists and financial experts often talk about “bubbles”.

Debt bubblesEconomic bubblesForeign Currency bubbles.  Now comes more evidence that the massive student loan college debt bubble is getting dangerously close to bursting.

Over the past 10 years the amount of student loan debt in the U.S. has grown by 170% percent, to a whopping $1.4 trillion — more than car loans, or credit card debt. In America.   44 million people have student debt and 8 million of those borrowers are in default.

A report by the Consumer Federation of America (an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education,) found that the number of Americans in default on their student loans jumped by nearly 17% percent last year (2016). Despite all the improvements in the economy, student loan borrowers are still struggling, in what was thought to be an improving labor market. Studies show that there are links between high student debt and health issues like depression, and marital failures. The whole thing is made worse by the fact that a large chunk of those holding massive debt do not end up with degrees, having had to drop out from the stress of trying to study, work, and pay back massive loans at the same time. Meanwhile, the subprime crisis cut the ability of parents to use home equity loans to pay for their children’s education (previously a common practice). This left the bulk of the burden to students, at a time when the unemployment rates for young people are rising.

So the big question is: What is going to happen next and when is the bubble going to burst?

Mark Cuban, is a very successful and well respected businessman. He sold his technology company before the dot-com bubble burst and made billions. He is also the owner of the NBA’s Dallas Mavericks.

Listen to what Mark Cuban recently told Inc. Magazine, re: his feelings about the massive student loan debt bubble.  Watch video below.

Defaulting on a federal student loan can be a financial disaster for the borrower. Unlike other types of debts, most federal student loans cannot be discharged in bankruptcy. Those who go into default face serious consequences including: wage garnishment, damaged credit scores and added costs in fees, interest and legal fees.

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See what you’ll learn at a Crash Proof Retirement Educational Event. Watch below.

Non-Partisan CBO says: “Debt & Deficits will Explode”

The Congressional Budget Office (or CBO as it is known) is a federal agency within the legislative branch of the U.S government that provides budget and economic information to Congress. The CBO is strictly non-partisan, and does not make policy recommendations.

That’s why its latest report is so frightening.

According to new projections released by the CBO on 3/30/17- Government debt and budget deficits are both set to spiral higher in the next 30 years if current patterns hold. The report warns that the rising debt and deficits, threaten another financial crisis.

The CBO report stated:

“The prospect of such large and growing debt poses substantial risks for the nation, and leaves policymakers with significant challenges. Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy & hurt the prospects for economic growth”

Due largely to increases in Medicare and Social Security costs, the federal debt will reach 150% percent of gross domestic product in 2047, according to the report.

Watch more from CNBC below.

The current total debt level of $18.8 trillion is about 101 percent of GDP. In addition to rising debt, the CBO also said:

“The budget deficit will more than triple from the projected 2.9% percent of GDP in 2017 to 9.8 percent in 2047.”

The CBO says rising interest rates is another main reason for skyrocketing debt.

 “Rising deficits will add to the debt load because the government will be forced to borrow more at higher rates to cover expenses that will exceed revenues”

To get the debt and the deficit under control, the CBO recommends the government cut spending and increase revenue.

Crash Proof Retirement has been warning of a US and Global debt crash for a while, and our feelings have been supported by world-renowned economic forecaster and best-selling author Harry Dent.

Listen to Phil Cannella and Joann Small’s exclusive interview with Harry Dent on the Crash Proof Retirement Show, below.