When there's a decrease in the loans going out, there's a decrease on the payments coming in at a future date.
When there's a decrease in the loans going out, there's a decrease in the demand for education services causing a reduction in the quantity available.
Repossession isn't a necessary condition for something to be in a bubble. Pulling demand forward and using laws/regulations/programs to funnel money into certain parts of the economy is what causes bubbles.
And, as has been discussed in another area of this thread, repossession of a college degree is possible. I'm not advocating it, but it would have a definite effect on incentives on both sides when making decisions about which college to attend, what degree to study, how much debt to borrow, and whether or not to repay it.
If student loan debt were bankrupt-able, and the degree revoke-able, I can see how that might remove some current problems (not that it wouldn't introduce others).
Exactly. Plus you can change the ground rules. In this case it can apparently even be done without changing the law :
Student loans are not excluded from discharge if excluding the debt would "impose an undue hardship on the debtor and the debtor's dependents".
So it only requires a small attitude change of judges for the bank's assumption that non-repayment is impossible to blow up. Given the attitude changes towards student debt that are occurring in the papers, can this really be that far behind ?
When there's a decrease in the loans going out, there's a decrease in the demand for education services causing a reduction in the quantity available.
Repossession isn't a necessary condition for something to be in a bubble. Pulling demand forward and using laws/regulations/programs to funnel money into certain parts of the economy is what causes bubbles.