Sign In

Article Information

  • The Student Loan Bubble: How the Mortgage Crisis can Inform the Bankruptcy Courts

    This paper parallels the current student loan bubble with the housing bubble of the late 1990s to early 2000s. The mortgage bubble was the quintessential example of a bubble that was destined to burst. Easy access to large amounts of capital, with few borrowing requirements, being put into an asset with grossly overstated values, created a situation where a bubble couldn’t help but form. Accelerating factors, like prolonged unemployment and underemployment, and the failure of the Home Affordable Modification Program (HAMP), only hastened and enhanced the economic ramification of the burst. This paper looks at the government and private sector responses to the mortgage crisis and presents a bankruptcy court solution that would be more successful than HAMP, in the event of a student loan default crisis.

​​​​​​​​​​​​​​​​​​​​​