The Phaserl


Student and auto debt fuel credit bubble 2.0

Student loans carry the highest delinquency rate of all debt classes. Student and auto debt up $1.15 trillion in last decade.


A large portion of our recent recovery has come from debt fueled consumption.  The bailouts have been favorable to financial institutions but access to debt for American families has been in segments that are counterproductive to wealth accumulation.  There is no benefit in having access to cheap loans for purchasing a car, an “asset” that loses value immediately after you pull it off the lot.  This is what is going on and we have seen a surge in subprime auto loans which is a double-whammy in slamming your financial future.  The biggest non-housing debt class in the United States is now with student debt.  Student loans are now viewed as the pathway for accessing college.  Over $1.2 trillion in student loans are now outstanding in the US and this debt class has the highest delinquency rate of all debt classes.  What this tells you is that many with student debt are unable to pay their bills.  That is problematic.  But this debt fuels the economy in odd ways.  Let us take a look at the two fastest growing debt fields.

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