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Are Student Loans the Next Financial Bubble?

Here is information about student loan debt from Triple Pundit:

Over the past 15 years, Congress enacted a bevy of laws in an attempt to reform financial and disclosure legislation. From Sarbanes-Oxley to Dodd-Frank, the goals of such legislation include increased transparency, a boost in consumer protection and, of course, shirking the onset of another financial crisis.

But the outcome is far from perfect – as evidenced by Wells Fargo’s ongoing scandals and the rise of unregulated shadow banking. With a new presidential administration keen to eliminate reforms that seek to rein in the excesses of the financial industry, watch for new economic risks to emerge in the next few years.

One of those risks is America’s mounting student debt, which is well over $1.4 trillion. According to MarketWatch, this figure rises at a rate of $2,726 a second.student loan bubble

In the wake of the global financial crisis of 2008, some commentators suggested forgiving some student debt as an attempt to relieve young workers and revitalize the middle class. But do not expect anything approaching that idea over the next four years. And now one student loan company, which has been sued in the past for its dubious business practices, has found itself in court again

As Bloomberg reported, in response to a lawsuit from federal regulators, Navient Corp. made it clear that its overarching goal is getting borrowers to “cough up cash” for creditors like its biggest client, the U.S. Department of Education.

That is quite a turnaround for Navient and its CEO, Jack Remondi, who wrote last month that the company’s goal was to help its 12 million customers, who make up over a quarter of the total number of Americans who are currently paying off their student loans.

It also seems to differ from Navient’s agreement with the Education Department, which contracted with the company — once a division of student lender Sallie Mae — to help borrowers pay off their loans and settle their debts in a way that is feasible for individual debtors.

But in a lawsuit filed in January, the Consumer Financial Protection Bureau (CFPB) said the company has been “systematically and illegally failing borrowers at every stage of repayment.” The CFPB noted that since 2009, most student borrowers secured the right to repay their loans based on their current income so they could become more affordable.

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