It is common knowledge that in the hierarchy of bubbles, not even the stock
market comes close to the student loan bubble. If it isn't, one glance at the
chart below which shows the exponential surge in Federal student debt starting
just after the great financial crisis, should put the problem in its
context.
And while we have previously reported that a shocking amount of the loan proceeds are used to fund anything but tuition payments, a major portion of the funding does manage to find itself to its intended recipient: paying the college tuition bill.
Which means that with student debt being so easily accessible anyone can use (and abuse), it gives colleges ample room to hike tuition as much as they see fit: after all students are merely a pass-through vehicle (even if one which for the most part represents non-dischargeable "collateral") designed to get funding from point A, the Federal Government to point B, the college treasury account.
It should thus come as no surprise that in a world in which colleges can hike tuition by any amount they choose, and promptly be paid courtesy of the federal government, and with endless amounts of propaganda whispering every day in the ears of impressionable potential students the only way they can get a well-paying job is to have a college diploma (see San Francisco Fed's latest paper confirming just this) there is no shortage of applicants willing to take on any amount of debt to make sure this cycle continues, that soaring tuition costs are one of the few items not even the BLS can hedonically adjust to appear disinflationary.
End result: tutitions have literally expoded across the country in both public and private colleges.
But while we know what the answer looks like at the Federal level, the question arises just how does this price shock look at the state level?
....
(Click link below to read more)
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