But as far as I know student loans aren't securitized and leveraged in the same way as mortgages were, so I'm not sure that the fall out will be as bad.
The root problem (as others have noted) is too many people are encouraged to go to college and even though most majors don't make economic sense students (rightly) feel that they need a college degree to be a competitive applicant for good jobs. Maybe I'm just in an ideological bubble, but it seems like there's pretty good agreement on this issue, but no real way to do anything about it.
That is the major difference, mortgages had people underwater on actual physical things like property. They would go bankrupt and foreclose which would have a domino effect on other things.
Student loans are ignored in bankruptcy and there is no domino if they fail to pay since a degree isn't transferable to another person.
If there were to be a bubble burst, the people impacted are those that can't pay loans back and the institutions that handed out the loans. Sure there could be a backlash but a lot of those loans are from the Fed, right?
Right, and that doesn't seem good to me, but I don't think the fallout from student loans will be anywhere near the fallout from defaulted mortgages in 2008ish because they just aren't as as levered.
So it's terrible for the people involved, but not directly bad for society as a whole (but probably still bad in its second and third order consequences).
I'd say it's less bad for the people involved - it "only" trashes their credit. It makes life difficult, for sure. I'm sub-400 I believe. But a mortgage foreclosure trashes your credit and you lose your home. I /just/ need to come up with 12 months security, so I essentially can never move.
The root problem (as others have noted) is too many people are encouraged to go to college and even though most majors don't make economic sense students (rightly) feel that they need a college degree to be a competitive applicant for good jobs. Maybe I'm just in an ideological bubble, but it seems like there's pretty good agreement on this issue, but no real way to do anything about it.