Archive for August 17th, 2010

New data from the department of education shows student loans at for-profit colleges are being repaid at lower than the expected rates. NPR asks,

Is the sequel to the subprime mortgage crisis a subprime education crisis?

I think this is a very fair parallel to draw, and something that we do need to keep an eye on to avoid another crisis. Although the crisis of 2007 was triggered by sub-prime mortgages, there is no reason another type of debt could not fuel another destabilization of the financial markets. It could be “toxic” consumer/credit card loans, automobile loans, or student loans that are packaged and repackaged like subprime mortgages were in the run-up to the 2oo7 collapse. Especially after the failure of the Financial Regulation bill to enact much in the way of meaningful reform, it could be only a matter of time before we have more problems. The best hope seems to be for regulation coming from the consumer protection agency, but we have yet to see exactly what that will look like.

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