Is the Student-Loan Market the Next Housing Bubble?

College debt has long been considered a crisis for students, many of whom feel like they have widening holes in their pockets. Now, some Wall Street analysts predict that the $1.4 trillion student-loan market is forming a bubble that’s about to burst, and skeptics (those with short positions) will profit all the way down.

FlowPoint Capital’s Charles Trafton calls it “the Credit: The Big Shortcollege bubble” in the New York Times. And, if he’s right, it’ll be The Big Short all over again.

Why should schools care? Because financial stress on students can lead to poor academic performance or, worse, increased dropout rates that impact rankings and brand. Unpaid bills on defaulted loans are another risk. Plus, admissions could be impacted if schools fail to communicate strong financial support and education for their students.

At the end of the day, a “college bubble” burst is bad news for everyone except the bears on Wall Street.

A potential crash will have unpredictable outcomes for schools. Here are some questions college marketers should be asking:

My eyes are staying peeled for what schools are doing to manage their brands against a volatile student-loan market.

For more of PadillaCRT’s take on the impact of student debt, check out the BuzzBin here, here and here. To view the survey we commissioned on how college debt impacts workplace engagement, which inspired stories in Inc., CNBC and more, visit: www.padillacrt.com/
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