Wall Street-Inflated Student Debt Bubble Hits $1 Trillion; Debtors Rally for Relief

The collective weight of American student debt is now over $1 trillion, and that weight is a drag not just on those paying the debt, but on our entire economy. It's hard to calculate exactly, because the lenders are notoriously unwilling to hand over their data, and with students defaulting at ever-higher rates, interest rates and fees are always changing, adding constantly to the weight of the burden college graduates (and those who didn't graduate but still have to pay off the loans they took out in more hopeful times) carry.

How did we get here, with more student debt than credit card debt, with student loans rising twice as fast as mortgage debt at the height of the housing bubble? Recent graduates face terrifying unemployment number.

Konczal pointed out that the government makes a profit somewhere around 13 percent for each dollar of loans, and because the loans are not dischargeable in bankruptcy and Social Security payments can even be garnished to make them up, default may even be more profitable for lenders than borrowers making payments on time.

....student loans are repackaged, bundled and sold at auction. “The people who buy it are mainly the biggest banks in the world, hedge funds, etc.”....

By Sarah Jaffe