The US student debt mountain (or hole, depending on which way you view it) has now exceeded one trillion dollars.

Some fear this could turn into a trigger for the next big financial bubble catastrophe.

Bloomberg’s Carol Masser explains in the Bloomberg video below how this massive amount of student debt, which exceeds the country’s automotive and credit card debt levels could well be the next economic trouble-spot with an impact as deep as the recent mortgage crisis.

Student debt is being racked up by both students and by their parents, but many find they cannot get the job that’s needed to give them a wage to repay it with. Added to this the rate of fee increases is exceeding inflation. has already been warning about the growing problem of an education debt bubble as people more and more view an education as some sort of investment that will eventually pay you back more than you put in.

And in the UK we can see the same sort of attitude taking hold. But with stories like 83 graduates for every job you do wonder how sustainable this really is.

In the US 81% of bankruptcy lawyers have seen a rise in the number of potential clients because of this in the last 3-4 years says Bloomberg.

The key seems to be to work with the debt collectors to make the repayments more affordable says Bloomberg, but the problem is that those collectors are on commission and the more they get back immediately the more they earn now. But at least they point out the bubble has been recognised early so can be addressed properly before it turns into a crisis.

If you are thinking that it’s just a US problem then do remember that so was the US sub-prime mortgage crisis. And look what happened there in our intertwined modern global economy. $1 trillion is also a lot of money.

Higher Education

Higher Education

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