- Oct 30, 2004
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What would happen if record numbers of student loans began going into default as a result of the piss-poor job market? Presumably, there are tons and tons of "sub-prime" student loans out there--the hundreds of thousands of people with bachelor's degrees who couldn't find appropriate jobs, the 20,000 law school grads who couldn't find legal jobs (since 40,000+ are produced each year and the economy can only support so many new lawyers), the Ph.D. scientists who have large undergrad loans who couldn't find anything better than postdoc positions, etc.
Could it lead to a tightening up of credit in the student loan market and perhaps the end of the education racket? Unlike houses, you can't "foreclose" on a student loan since there isn't any real property to claim. Perhaps banks and the government could try to have the defaulters declared to be slaves.
I will totally laugh my ass off if we end up with a student loan default crisis. Because, after all, lots of angry, overeducated, underemployed-involuntarily-out-of-field (or unemployed) Americans need bailouts too.