- Just as the mortgage lending boom pushed home prices upward, student loan lending has put upward pressure on tuition. The bankers said both examples showed a "lack of underwriting discipline."
I always end up writing in these threads because of my unabashed lividity towards the higher education system, and I by god it is nice to hear this finally acknowledged and spoken by someone in the Fed, even if Bernanke doesn't fully agree. It's a fresh change hearing this is a problem by people who actually have some power and education in this matters as opposed to hearing the empty words from politicians.
It's one of the biggest financial distortions that I can think of. The cost of college education doesn't reflect the return on investment, but it's become a trap, because your earning potential without a college education is still quite a bit worse. Tuition rates have almost created an obligatory debt for the white collar work force. Add that on top of a mortgage, and it's no wonder that the middle class is losing wealth to those at the top. A very large number of people spend a decade working for lenders.