Education has been tied tightly to the American Dream. Go to college, get a job and live the good life. But increasingly that dream has a lot of baggage in the form of student loans.

The Wall Street Journal recently laid out how U.S. student loan debt rose $42 billion in the third quarter to make a total of $956 billion.

"President Barack Obama championed easy-to-get loans during the campaign, calling higher education 'an economic imperative in the 21st century,'" wrote The Wall Street Journal. "A spokesman for Education Secretary Arne Duncan said the goal is 'to make student loans available to as many people as possible,' and requiring minimum credit scores would block many Americans from going to college."

Eleven percent of those loans were at least 90 days behind in payments.

Since the end of 2007, The Wall Street Journal says, student debt has grown more than 56 percent (adjusted for inflation).

The Zero Hedge blog looked at the numbers back in September and concluded the next sub-prime loan crisis is already here with at least $122 billion in federal student loan defaults: "(O)ne question that has always evaded greater scrutiny has been the very critical default rate for student borrowers: a number which few if any lenders and colleges openly disclose for fears the general public would comprehend not only the true extent of the student loan bubble, but that it has now burst. … Broken down by type of education, and using the new, improved, and much more realistic benchmark, for-profit institutions had the highest average three-year default rates at 22.7 percent, with public institutions following at 11 percent and private nonprofit institutions at 7.5 percent.

"In other words, more than one in five federal student loans used to fund private for-profit education is now in default and will likely never be repaid!"

Bloomburg's Businessweek says this is a tragedy.

"For the first time on record, the delinquency rate on student loans has jumped above the rate for credit cards, car loans, or any other kind of consumer loan," said Businessweek. "The tragedy? Many of those loans will default, with stunningly harsh consequences, even though there are many good options for debt relief — deferment, forbearance or reductions in monthly payments."

And when they default it isn't pretty, Bloomberg says. "The federal government can garnish up to 15 percent of a borrower's wages, Social Security disability, and Social Security retirement income without a court order. Unlike other debt, student loans can't be discharged in bankruptcy. Collection charges of up to 20 percent can be skimmed off the top of payments — enough to turn a 10-year loan into a 19-year loan."

While the ability to discharge a student loan after a person gets it is next to impossible, getting the loans is as easy as pie, according to CBS News: "Most student loans are made through the federal government, which only vets borrowers in the most cursory of ways. In fact, the government doesn't seem to care whether you are a liberal arts major, with little chance to earn enough to keep pace with your loan payments or a software engineer, who should easily make enough money to carry the debt load."


Twitter: @degroote