That the student loan bubble is one of the many "subprime" crises (because as of this moment there are just too many asset bubbles to count thanks to 7 years of global ZIRP, NIRP and QE) has been documented here ever since 2012. We also explained that the main reason for soaring college costs is the cheap and easily accessible government-funded student debt, which at last check was over $1.2 trillion and rising exponentially.
Today, the WSJ had an article on just this, titled "U.S. Helps Shaky Colleges Cope With Bad Student Loans" in which it explained in fine detail what our readers knew already, namely that it is the government's direct intervention with trillions in "aid" that is making the debt default problem far more acute than it would have otherwise been, and leads to keeping millions more "students" in college where they end up learning no marketable skills in a job market that rewards mostly waiters and bartenders, yet loads them up with untenable debt.
Like we said: nothing new. There was however one stunning fact buried deep in the article.
While we knew that overall student loan default rates for all US colleges were in the 8-10% range based on the Fed's quarterly consumer credit data, what was stunning is that the "non-repayment" rate, or the percentage of students who haven't made a single dollar toward their loans within three years of leaving college is a crisis-worthy 21.3%. This means that of the millions in college graduates from the 2010 and 2011 cohort (and since then the job market for recent graduates has gotten worse), more than a fifth don't have either the means or the intention to repay even one of the tens of thousands of dollars they owe...
... which means that ultimatley it will be up to taxpayers to once again foot the bill.
But wait, there's more. Because while 21.3% may seem like a lot, and it is, the number rises to an absolutely stunning 50%, or half of all students, when looking at the 108 worst college offenders in the US. From the WSJ:
At 108 four-year colleges, at least half of all students hadn’t paid even $1 of what they owe within three years of leaving college, according to an analysis by The Wall Street Journal of the latest government data. Those colleges got more than $10 billion in federal student loans and grants last year.
Arkansas Baptist’s nonpayment rate on student loans was 88%, the highest of any four-year college in the U.S. More than four out of every five students drop out. Fitz Hill, president of the historically black private college, says the numbers look bad mostly because Arkansas Baptist enrolls poor students.
Sure, there is always a reason. And just for future reference, here are the25 colleges whose students will be the first to demand a bailout of their student loans when they stop pretending they will ever repay, and go straight to the "default" column wihout passing go, if collecting tens of thousands in taxpayer funds.
The full list of all US colleges tracked by the WSJ can be found here.