Student Loan Bailout

All in all it's just
Another brick in the wall
--Pink Floyd

President Obama is taking unilateral actions with the stated purpose of easing the burden of college student loans. The primary move is to cap loan repayments at 10% of monthly income.

Meanwhile, proposals for loan refinancing and loan forgiveness continue to circulate.

Such actions fit the general mold of bubble blowing followed by bailout. In this case: Make cheap student loans easier to get-->increase supply of college grads vs what markets will bear-->decrease salary per graduate-->make it tougher for college grads to pay back loans-->ease pain by loosening payback terms.

In 2013 student loan debt surpassed credit card debt, and crossed the $1 trillion mark. Delinquencies have been rising even faster than student loan growth over the past year or so.

The higher ed bubble continues to grow--and moral hazard along with it.