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Well outstanding student loan debt is approaching one.
Billion dollars I think that's actually one trillion dollars my guess is shaking his head correct -- -- air their policies.
Anyway our guests here calls this next giant bubble and says it's so -- it rivals this sub prime debacle.
Here now as Martin Hutchinson analyst at my money morning.
-- Michael Steele again great to see okay so outstanding -- -- Lindsey Wright has passed one trillion dollars UC this is a -- this is very much in the news this week as you know the president.
And GOP nominee Mitt Romney both agree that that program to -- the interest rate paid on a very popular federal student loan program.
Should be enacted does that ease the -- -- You've gone -- federal guarantees on a lot of these student lends.
The student loans on its -- distinguishable by bankruptcy so.
When the -- students -- -- -- up to forty that -- given to the student lands.
And you've got these interest rates subsidies as well so effective -- what you've got is an extremely powerful sales mechanism.
Pushing students to take on more debt than they -- a full -- because there's so much debt supporting these college costs -- very easy for the financial I'm -- the academic institution.
To keep raising tuition costs yes and it's -- -- -- the get the money either.
It's interesting the last decade the cost of being up about 31%.
Defense is up about 14%.
And college presidents top 75%.
Of the basically the administrators of -- it to themselves.
-- no -- expanding the bureaucracies as well so the solution here you write is to stop the government backing GAAP and these should.
Definitely be forgiven in bankruptcy correct yes absolutely I mean now it's not the student's fault if he gets he's on the student and some nineteen year old is I didn't take on a 150000.
Dollars of debt.
That's not a decision he can make he doesn't know that -- degree in anthropology is not gonna get him a job that's gonna pay that back he doesn't have that sort of financial draining.
OK but I yanks are gonna say oh my goodness this is very troublesome to us because worse -- still dealing.
With the sub prime alt a mortgages a lot of bad debt on the balance -- still.
So you know and in some other economic challenges out there too and at the banking system is an all Ria has Billiton added if you -- know -- so I.
You can't say I mean if the government to go with a guaranteed a -- and you can't take it away but.
What you can do is if you stop the only guaranteed -- -- colleges are gonna have to push that cost down.
And students who don't have the money you're gonna have to look at other alternatives like state college instead of five or college.
Or indeed the for profit colleges which -- have a lousy reputation.
But you know that's because -- competing with subsidized competition I think.
Other weddings but to your point to -- writing what if you are -- but brilliant I mean are there still student loans out there that are acceptable or acceptable in your -- Well I think I mean it's fine if they can get student loans and I think that's a good thing pell grants can pell grants -- -- and you could also there have firm come.
He's funding to -- in them.
Billy you have gifts of disciplines that are actually useful -- apology but computer science facts are more vocational more vocational -- back kind of take a -- if you -- -- -- and you go to state college you'll get a nasal way flu and still end up at the top of the -- Edible pet that -- raises a question about the employment situation how optimistic are you that you -- picture will improve to the point where all of these graduates well actually find game full employment and be able to pay back.
Their loans and this will not be a bubble that -- I think Illinois has to be a -- -- thus not because the employment situation went to improve but say many.
-- salaries the people get just don't enough to pay back these sort of blends and -- -- Well guys -- any enemy paid 3040000 yet they can't pay back a 150000 dollars student and Martin Hutchinson a -- -- -- again Greg thank you very.
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