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'Debt Bomb' Tticks As Burden Grows \ $870 Billion Total Tops Outstanding U.S. Credit Card And Auto Balances

Publication Date: 
April 13, 2012
Source: 
Chicago Tribune
Author: 
Becky Yerak

Professor G. Marcus Cole spoke with Becky Yerak of the Chicago Tribune on student loan debt in the US.

Move over, mortgages. Get out of the way, Greece. Another economic doomsday scenario is emerging.

Student loan debt has reached about $870 billion, exceeding credit cards and auto loans, and balances are expected to continue climbing, the Federal Reserve Bank of New York said last month. In February, the National Association of Consumer Bankruptcy Attorneys referred to a "student loan 'debt bomb' " and wondered if it was shaping up to become "America's next mortgage-style economic crisis." Such a burden could crimp an already weak economy.

...

It would "result in a dramatic increase in the cost of student loans for all borrowers, ultimately drying up the availability of such loans for those who need them most," testified Marcus Cole, a Stanford University law professor. He called it an "unjust transfer from innocent lenders who did nothing more than give money to people in hopes of being repaid someday."