Student Loans May Be ‘Next Debt Bomb’
March 12, 2012 by UPI - United Press International, Inc.
WASHINGTON (UPI) — Financial analysts say the “next debt bomb” for the U.S. economy may be the rapidly growing student loan debt burdening most American families.
William Brewer, head of the National Association of Consumer Bankruptcy Attorneys, says student loan defaults in the short term “are are not gong to have the same ripple effect through the economy that mortgage defaults did,” but he told The Washington Post student loan debt poses a risk to the economy.
“This could very well be the next debt bomb for the U.S. economy,” Brewer said.
He said his main concern is the long-term effects of student loan default, which may make student loans too risky for lenders.
“Our best and brightest won’t necessarily get the education that they need to move us forward,” Brewer said.
A recent study by Brewer’s organization found more than 80 percent of bankruptcy lawyers have noticed a sharp increase in the number of people seeking relief from student loan debt.
The amount of student loan borrowing in 2010 was $100 billion, but that shot up to $867 billion in 2011, surpassing the $704 billion in outstanding credit card debt, the Post reported.