The Next Bubble

Guess what the next government-sponsored bubble will be? The chart below form Mark Perry suggests that the tuition bubble will occur for the same reasons the housing bubble did. Just as government decided that too few people owned homes, it has decided that too few people go to college. Government has poured gobs of money into subsidizing student loans just as it poured gobs of money into subsidizing mortgages.  The predictable result is that the underlying purchase (housing or college) soars in price. Schools happily raise prices — and lower standards — to siphon up the federal money. All of this without respect to whether the borrower's future income stream will be able to service the debt easily. One more example of how good intentions cannot overcome bad economics.