40 Million Americans have taken out $1.4 Trillion in Student Loans. 8 million of those borrowers are already in default, which means the American Tax Payer, through the Federal Government, as the Guarantor is on the hook. As usual, this is a problem that Big Government has caused. By making getting loans so easy, students have borrowed and borrowed, rather than work their way through school as this Blogger did. This easy money has driven tuition through the roof, up way more than any rate of inflation would warrant, as colleges and universities just take advantage of this Big Government gravy train largess.
This creates a vicious circle as students have to borrow even more to complete their degrees, many of which aren't worth the paper they are written on because they are not leading to good paying jobs. The end result is that many students are graduating with $20,000 or much more in debt. Student loans are one of few debts that cannot even be discharged, even with a bankruptcy filing, so that means theoretically students are on the hook forever even if the Federal Government steps in as the Guarantor in the event of default.
To make matter worse, Scam Artists, seeing an opportunity to make money off these panicked Students, have sprung up to help Students get their loans "forgiven" under various Obama Executive Orders. In fact, the ability to apply for forgiveness is available on government websites for free. The United States National Debt is now at close to $19 Trillion with no end in sight. Potential losses from Student Loans are not included in this number. When all is said and done, it is very likely that the American Tax Payer, along with borrowing even more money will be needed to cover all these Student Loans that end up in default. Does Government Failure ever end.