Student loan bubble

Members of the class of 2011 have walked across the stage and switched their tassels from the right to the left. But as they drive away from campus, they carry more than a diploma and fond memories with them. They are also saddled with a larger debt load than any previous graduating class.

The average amount of debt incurred by today's graduating seniors is $24,000, according to the Project on Student Debt. Student loans have surpassed credit cards as the nation's single largest source of debt, with the total figure approaching $1 trillion. One culprit is the price of tuition, which by some accounts has increased more than 900 percent since 1978, far exceeding the rate of inflation.

This leaves many wondering whether student loans could be the next bubble: An intense faith in the value of an education is prompting consumers to incur large amounts of debt in order to pay hyper-inflated tuition prices.

Ironically, college may actually be worth less now that it was several decades ago. Professors spend less time in the classroom and delegate more to teaching assistants and graduate students, spending only 11 hours per week themselves on teaching, preparing to teach and advising students. This is according to a recent book, "Academically Adrift," by education professors Richard Arum and Josipa Roksa, who also report that professors aren't the only ones spending less time on classes. In the 1960s, students spent an average of 40 hours a week on academic work, compared to just 27 hours a week today.

Loans to finance a home or an education have long been extolled as "good debt" — the kind that is excused as a sensible investment in the future. Housing prices rise over the long term, and college graduates make more money than people without degrees.

The housing crisis taught Americans to think more carefully about what kinds and amounts of debt make sense in the purchase of a home. The steady climb in tuition and student debt should likewise prompt a conversation about what is reasonable in the purchase of an education.

The student loan bubble is unique in that there is no tangible asset involved. An education can't be repossessed. Students can't abandon their degrees the way people in over their heads could walk away from a house, and using bankruptcy to escape student loans is prohibited by law.

Students graduating with significant debt have no easy out, and they face serious challenges. Marrying, buying homes and starting families are all the more daunting with a large burden of debt looming – even if it is "good debt." The "anti-dowry," as it is known in some circles, may be even one factor among many influencing a delayed transition to adulthood.