As the title indicated, I think things are going to get very bad in America relatively soon. I hope I'm wrong, but I'm planning on using a bunch of common sense/theory and a bit of data to show why I think everyone should be extremely concerned. Like most people, I've been told an incredibly lot of incorrect information in my life time and was never taught to think in terms of probabilities. I've since learned most of the "wisdom" passed down to me from my elders just consists of people telling me their own personal experiences and thinking that what happened to them will likely happen to everyone else. People assume everything will be as it has been in the past, and people hate it when someone goes against the grain and tells them information they don't want to hear about bad times to come like they've never experienced before. A classic example: http://www.youtube.com/watch?feature=player_embedded&v=2I0QN-FYkpw
The education bubble is occurring right now due to several reasons. The first is tuition has increased drastically over the last 20-30 years, so now people are paying tens of thousands of dollars a year to go to college whereas in the past they were only paying a few thousand. http://inflationdata.com/inflation/images/charts/Education/education_sm.jpg In the past, it simply wasn't possible to rack up a huge amount of debt from college like is now. Classes were very cheap so getting an education posed no major risk to your long term financial stability. Now, it is easily possible to rack up $100k+ debt from undergraduate school and another $100k+ from graduate school/law school. This is going to cause a huge problem for several reasons, the first of which is the job market as a whole is incredibly bleak. Since one can't declare bankruptcy on student loans, this means people are going to get stuck with this huge amount of debt for a very long period of time. Law school is a great example of this where people are regularly graduating with 200k+ in debt and have no way of getting a legal job to pay it back. http://www.elsblog.org/.a/6a00d83451b58069e2014e86a0d416970d-450wi. All this money is owed to the government which students can't pay, and even if it can't be legally discharged, you can't bleed a rock.
Another huge problem is since the government made it very easy to obtain student loans and brainwashed people with the idea that "college debt is good debt and you can't make a bad investment in education" is we have all these students who aren't very intelligent getting useless degrees. I've more or less heard the following several times: "Are you too lazy and/or lack the intelligence to do math? No problem, become a political science major! Do what you enjoy and the jobs will come! If you like art history, you should totally major in art history, people will see you graduated from UC Berkeley and know you're smart and want to hire you no matter what!" Sorry, that's not how it works. I don't blame the 18-20 year olds who are being told this incorrect information since they're too young and gullible, but if you aren't intelligent enough to get a useful major, you shouldn't be going to college unless it's very, very cheap (and even then likely not). The real world doesn't care if you like art history, that's a hobby, not a job. We now find ourselves when unintelligent people hold useless degrees and a lot of debt. Is it really difficult to speculate whether it will ever get paid back, and if it doesn't and it's funded on federal loans, who ultimately ends up paying the bill?
Lastly and perhaps most importantly, the reason this will cause a huge problem is Americans have a huge sense of entitlement. Old people want access to incredibly expensive medical technology to keep them alive even though they aren't productive anymore and never produced enough to pay for it. Many poor people live much better than people did 100 years ago or many really poor people around the world live, but still feel abused and that they deserve more. They don't understand if they can only get a job for $8/hr, their time is likely (but not always) only worth $8/hr. The middle class (and even the rich) feel their taxes are way too high and they give way too much and get too little. In other words, every single socioeconomic and/or age group in this country seems to think they are entitled to more, and right now we're spending way, way more than is sustainable despite the fact people want MOAR.
Young people in America share this sense of entitlement, but they are often infuriated they are in debt for a few reasons. The first is the government is now unable to help them because the baby boomer generation has gotten us into so much debt. This means they are paying taxes for things like Medicare they'll likely never get to use. In addition, many kids (and they are kids) agreed to take on this debt before they had any idea what was going on. You can literally rack up $100k+ in student loan debt before you are allowed to legally drink alcohol. Let that sink in for one minute- the government thinks teenagers are intelligent and responsible enough to make financial decisions which are able to impact them for the rest of their life BEFORE they are intelligent and mature enough to have a beer with some friends. Something is very, very wrong here.
I consider myself a very honorable person. I would never consider taking out loans that I did not think I could pay back and if I were in debt I would work very, very hard to pay back the debt. But honestly, I can imagine myself being fed an incredibly lot of incorrect information (law schools are very, very guilty of this) at a very young age and really resenting my debt, to the point where I would feel I shouldn't have to pay it. My thought process was so weak when I was 18-20 compared to now at 25, and the entire higher education system seems to be aware of the fact that teenagers are stupid (shocker!) and has no problem taking advantage of it. I have a problem with people taking advantage of people who don't have a fair fighting chance, and I'm pretty sure it's not that hard to manipulate and trick some 18-20 year olds to making a terrible life investment. I would feel entitled (there's that magical word again!) to a government bail out since I was too young to realize we were at a higher education bubble, and really, how am I supposed to make the correct decision when I'm 18-20 and everyone around me is telling me to go to college so I can make a bunch of money?
I don't need to be told this is a huge problem waiting to happen. I don't need to be told "work hard now, make money and get a skill set you can't lose now while you still can." I know no one is telling me this because most people haven't experienced it in America since the baby boomers lived for the most part very easy lives (especially compared to the generation before it which experienced some giant wars and the Great Depression). It isn't because people are informed and using common sense and have concluded "there is nothing to worry about." Use common sense and hopefully when things do get really bad you'll find yourself much better off than you would have otherwise been with your head in the sand.