Photo: Bloomberg TV
Well-known economist Dr. Gary Shilling weighed in on whether the next bubble to burst is student loan debt this morning on Bloomberg “Surveillance” with Tom Keene and Scarlet Fu.Here’s Shilling:
“Well, it certainly is a serious problem because a lot of these people come out of college, they’ve had soft majors, they’re really not prepared for the jobs that are available.
“They have huge debts. Their parents don’t have the money to back them up anymore. They’re struggling with their own retirement fund.
“These people are really stuck and I think the student loan crisis really highlighted the problem with higher education.”
Bloomberg TV’s Fu jumped in a pointed out that this is very similar to the subprime crisis in that students are getting government-funded loans for these for-profit colleges.
Here’s Shilling’s response:
“In this county, we’ve associated success economically, socially, etc. as a college education.
“But the whole idea is smart people go to college. But going to college doesn’t make you smart.
“But, because we think it does there’s a college for every intellecutal level and that’s the private colleges. In otherwords, you could be an absolute dumb-dumb and as long as you get a government loan, there is a for-profit college that will take your money.”
Shilling isn’t alone warning about a student loan bubble. David Rosenberg has warned that heavy student debt is hindering home sales and other personal consumption expenditures.
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