Student Loans A Lot Like The Subprime Mortgage Debacle, Watchdog Says
Mike Calhoun is a man on a mission. He’s flying around the country, warning state lawmakers and prosecutors, sounding the alarm at conferences and with members of Congress.
He did the same thing back before the housing market crash, warning then about reckless subprime loans. “We projected over 2 million subprime mortgage foreclosures, and the response was we were ridiculed by the industry,” he says.
Of course, Calhoun was right. In fact, the wave of defaults and foreclosures was even worse and drove the economy into the worst recession in generations.
Back then, he was watching the number of risky mortgages grow and grow. Now he’s watching student loans, “and there are a lot of similarities,” he says. “You’ve had an absolutely explosive growth in the amount of student debt. In 15 years it’s gone from about $300 billion to now $1.6 trillion.”