Last year, students received more than $100 billion in school loans for the first time ever, and total outstanding loans will surpass $1 trillion for the first time this year, according to USA Today.
Americans now have more debt on student loans than on credit cards, according to USA Today. After adjusting for inflation, student borrowing has doubled in the past 10 years. In the past five years, total outstanding debt has also doubled. That's a sharp contrast to consumers decreasing what they owe on credit cards and home loans.
Taxpayers and other lenders don't have a great deal of risk of losing their money on loans, unlike mortgages prepared during the housing bubble. Congress has given the various lenders, including the government, a broad range of powers that are much greater than those of credit card or mortgage lenders, according to the article. The debt can't be erased by bankruptcy.
The risk lands on the shoulders of the young who will start their adult lives with a considerable amount of debt, according to USA Today. That hardship could be a drag on the economy in the future.
"It's going to create a generation of wage-slavery," Nick Pardini, a Villanova University graduate student in finance, told USA Today. Pardini has warned on a blog that the student loans will be the next credit bubble, with borrowers, not lenders, taking the hit.