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Student Loans Could Be Next Financial Bubble

(ajagendorf25/Flickr)

(ajagendorf25/Flickr)

After finally graduating from college, the work actually begins for many students. Balancing an unpaid internship with multiple jobs, scrimping and saving just to keep above water, many college graduates find themselves saddled with thousands of dollars of unpaid student loans.

As unemployment numbers hold steady and students face their first loan payments, what happens when they have no money to pay?

Some economists worry that the student debt weight may start to drag the U.S. economy down even farther.

According to an article in The Root by Dara Sharif, outstanding student loans totaled about $805 billion as of March 30. In a July report quoted by Sharif, the credit-rating firm Moody’s Analytics worries that the inability to pay back student loans could trigger the next economic crisis.

“Rising tuition costs, a soft job market and troublingly low graduation rates at many schools cast doubt on whether a growing number of people will be able to pay those loans back,” Sharif wrote.

Trouble with student loans may only exacerbate economic woes for both middle class and minority families. With African American unemployment well-above the national rate, some analysts fear that a college loan bubble burst could be especially hard on the black community.

All hope is not lost for new college graduates, however. For some, college loans are an investment that will pay off. The problem — according to Joseph B. Moore, president of Lesley University — is that we’re on an unsustainable track.

Are you struggling under mountains of debt? How will escalating student debt affect Boston, the capital of U.S. higher education? How can we alleviate the student debt crisis?

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Hosts Meghna Chakrabarti and Anthony Brooks introduce us to newsmakers, big thinkers and artists and bring us stories of relevance to Bostonians here and around the region. Live every weekday at 3.

WBUR's Sacha Pfeiffer is co-hosting Radio Boston while Meghna Chakrabarti is on maternity leave.

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