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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Apr 16, 2012

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Recent reports revealed the student loan delinquency rate doubled between 2005 and 2009, spurring some experts to issue new warnings of an impending “student loan debt bomb.”

One of those experts is the National Association of Consumer Banking Attorneys (NACBA), according to the Des Moines Register. NACBA argues that growing debt, rising defaults, and struggling economy have all contributed to this sharp uptick in defaults. They warn that borrowers’ inability to repay their college financing may affect the entire economy as a whole.

“We’re having all these folks that have lost jobs. They’re filing these bankruptcies, and time and time again, we’re getting people with $60,000 in student loans,” said Mike Jankings, a Des Moines bankruptcy attorney, reported the Des Moines Register.

But others aren’t so sure the student debt problem is as serious as an economic bubble.

David Swenson, an economics professor at Iowa State University, believes there are key differences between the student loan bubble and the mortgage bubble which should reduce our worries.

The key difference, according to Swenson, is the fact that student loans cannot usually be discharged through bankruptcy. When people must pay this borrowing back, the burden isn’t placed on the nations’ taxpayers. The individual may suffer as a result of this inability to discharge the debt, but the strain on the national economy is reduced.

Experts also say that despite the fact that student loan debt now exceeds $1 trillion, it’s still far less than the total mortgage debt.

Predators or Prey: Who’s at Fault?

There’s yet another passionate divide when trying to determine causation for this growing student debt problem. Some claim the colleges and our financial system are at fault for this economic illness metastasizing in our nation’s youth. Others claim it’s our college-goers themselves who are making imprudent decisions.

The Occupy Movement is perhaps one of the most vocal bodies against the powers that be. They have made their stance very clear and have turned to grand demonstrations that have succeeded at catching the media’s attention for months on end now.

“There’s a lot of talk about student debt, but no one takes any action, and that’s what Occupy Wall Street is about,” said Andrew Ross, a professor at New York University, according to MSNBC. “I feel very bad that my salary has actually been financed (by these debts). … To me it is just heartbreaking to see my students carry so much debt. It’s just immoral.”

Others, however, feel quite the opposite.

David Hakes, an economist at the University of Northern Iowa, told the Des Moines Register that too many students pursued what are essentially worthless degrees that carry no economic value.

“The fact is,” Hakes began, “If you have to explain your major in a job interview, that is not a good sign.”

Between the predatory nature of capitalistic businesses looking to turn profits off student loan borrowers, and students themselves who have been persuaded into believing they can “be anything they want to be,” even if they want to be a millionaire of an underwater basket weaver, the student loan crisis has emerged.

Time will tell if this crisis is indeed an actual bubble.