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Are you my dear -- -- about something really exciting and that's -- -- in our actions say concerning student loan debt has been on the rise throughout the last year.
-- if you can believe it near the one trillion dollar mark.
Estimates before today's update on consumer credit -- -- loan debt continues to -- up with nearly 39 million people holding some amount of student debt.
-- -- and that's so is the director of economic research for the reason foundation he's here to tell us how all of this outstanding.
Debt will impact the economy Anthony thanks for joining us once again.
Our existing loan debt -- he -- piling on pushing that one trillion dollar market in characterizes next financial bubble.
To burst causing of course a ripple effect of economic course so do we need to be doing something -- to -- it to rein it in.
We need to be concerned investors -- that absolutely.
The word bubbles start around a lot and sometimes it's it's related to the housing bubble mark going to be the same way because it's not.
The financial situations don't have housing debt or don't have a student loan debt in the way they have housing debt.
-- -- with the you know think that student loan debt is a bubble about to burst because it's -- and the only gets a higher level outstanding debt is mortgage debt.
And you've got these low interest rates with congress extending the time frame that it's keeping.
Interest rates so low as well it's a bubble for households so -- Financial markets and that's -- important to -- the economy right but that but so it's not gonna be that we're gonna see financial situations needing bailouts as you see homeowners that have.
Increasing levels of debt so if students default on its debt it's not forgiven -- bankruptcy right thanks aren't -- -- straddled with -- -- saddled with that.
The federal is that in fact the matter is federal government has almost all student loan debt at this point.
OK so institutions aren't going to be saddled with this losses primarily it's a federal government that has a majority of us especially since 2008.
They've taken on -- up to ninety and even more percent of student loan debts as a result.
If you could be the taxpayers that don't wind up sort of having the deal -- cost for the -- the facts of the matter is.
Student loan debt has gone up in terms of not housing related debt it was about 10% -- that ten years ago now it's 35%.
Of household debt that's not related housing.
That is going to be crushing homeowners which means they're not going to be saving and declining savings means less investment less investment means.
-- -- -- -- -- -- And you can even bring it home further right saying you've got these young adults fresh out of school in a lackluster job market.
They're not really able to dig in and start their American dream right there knocking me by a car lot of them are probably gonna be moving back home with mom and dad right.
-- -- -- -- And -- owning homes it's what it's going to be a change the American trip I don't know that that that particular change the American dream is the problem biggest problem it has is the -- is going to be a declining savings decline savings -- investment in the economy -- mean that's why we have such a dismal economy right now is there's very little.
Aggregate investment and -- if there's.
You get consumption bumps that -- -- these like little spurts of GDP and -- that provides a little bit but in terms of long term growth you need investment he needs savings for that increase that hurts that.
The availability of debt is so flash that the institutions can keep raising raising tuition I mean do you look at stopping that -- at all.
Big increase in tuition is a huge problem actually if -- since 1980.
The the rate of tuition has grown about 3.5 times the rate of inflation and -- incomes are right at about inflation since and so.
That that gap that -- -- that student loan debt is coming fronts.
What I would say is it the less good federal government is providing in student loans and -- the less the -- there's going to be for education at these prices which would force institutions to short change some models but at the same time students are gonna have to turn.
To alternative education models.
-- you're not going for the four year degree is it is something that people need to embrace.
But at the same time employers.
Need to recognize that they don't have to just be looking for the four -- Harvard degree to be able to get somebody incredibly talented at.
That's a -- -- -- conversation that -- It absolutely but it's and there are so many angles to -- student -- -- thank you so -- if -- -- -- -- for joining -- and -- and -- that's great.
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