Student loans will be the next financial crisis.

I wish I had a more uplifting message, but I've just learned that beginning this summer, federal regulations are limiting student loan deferment options for those who are unemployed or underemployed (working 30 hours or less each week). This is essentially the equivalent to pouring gasoline on a slow-burning bonfire, since the unemployed and underemployed are the ones most desperately in need of deferment and forbearance options right now. Unfortunately, most students currently in deferment won't learn of the change until they attempt to re-apply, since the only acknowledgement of the new regulation is an adjustment to the deferment application form. I'd like to say I'm surprised by this move, but in light of the continuing idiocy and ignorance we've been seeing from our public officials, nothing shocks me anymore.

I've been keeping an eye on the academic system for some time now, with it's inflated tuition and costs, exorbitant student debt loads, and low probability of gainful employment following graduation. Today I'd just like to mark this prediction: within the next couple years, the student loan industry (and perhaps the entire academic system) will follow in the footsteps of the credit crisis, subprime mortgage crisis, banking crisis, car industry crisis, etc. It's only a matter of time.

Right now, more and more unemployed citizens are flooding into schools around the country as a last ditch effort to survive the recession. Meanwhile, current undergraduates are still leaving college with an average of $25-50K worth of debt (or upwards of $80-150K for post-grad work). Since unemployment is continuing to rise and students with little job experience are even more unlikely to be hired, it won't be long before thousands of new graduates begin to default on their loans and descend into bankruptcy. Some may return to graduate school as a stall tactic, accruing even greater levels of debt--and by the time they're done, they'll have the equivalent of a student loan mortgage hanging over their heads, with interest building every year. Unless job rates begin to turn around, they will likely join their peers in loan defaults and bankruptcy. In time, this will inevitably cause the banks and federal government to impose additional inane and consequence-oriented restrictions, like the ones happening now.

What does this mean for the country? I can only guess, but it doesn't look pretty. All I can say is that it's time to tighten our belts even further--we're in for a long and wild ride.