There are many reasons why the student loan bubble has gotten so big:
1. Tuition keeps going up, up, up!
Lots of factors here, including less funding of public institutions by various governments. Public universities were a few hundred dollars a semester back in the day, and long, long ago they were free.
2. Salaries, adjusted for inflation, keep going down, down, down!
Even though young people today are better educated, young people in 2014 made about 20% less than they did in 1989. Those of us old enough to have been working in the 1980s remember that the job market was already worse than it had been in the 1960s. Two generations of declining wages so far.
3. Very few opportunities for people without degrees, so there is more supply than demand.
Lots of reasons for this, hopefully the Trump Administration's (*) proposed reforms of the H1-B scam will help.
I knew a guy who had never been to college who was assistant manager of a pizza place in a college town. The people who worked under him were college graduates from the University of Wisconsin -- one of the top public universities in the US. They were working **** jobs to pay off their student loans.
4. The rent is too dang high!
Housing costs are unbelievable. My wife's family moved to NYC in 1980, and apartments like the ones they rented in the Lower East Side are now going for 10x or more what they were back then. Hey, I remember a summer in the early 80s when I paid half the rent for a $90 a month apartment in Honolulu, and $15 a month for a bus pass. I spent a summer away from college working minimum wage in a store in Waikiki and still saved up money for college. Can't do that anymore.
5. (This is a big one!) Lots of people are not finishing their degrees, or else finish after switching schools at least once.
This is partly due to there not being any job opportunities for people without degrees. People go to school, find themselves way over their heads, and wind up with the debt but no degree. This happens to a LOT of people.
6. Pie in the sky dreams,
encouraged by shady colleges and loan givers at times.
Many young people have no idea what they want to do with their lives.
My son is lucky. He knew what his major would be before his senior year in HS, so he went to a college where he could go through in 4 years and get an engineering degree. Having a few AP credits helped as well.
I have a daughter at U Wisconsin, and the engineering majors there go through in 5 or more years(**). That is because they take lots of general intro courses to see what they really want to do, and by that time it takes an extra year to graduate.
What happens to the people who change their mind?
They transfer, they take forever to graduate, they often don't graduate.
7. Scam universities.
We all know about them. Get the loan and give **** in return.
8. Scam financial aid and banks.
To some extent the student loan program is a complete scam whereby the US government subsidizes the banks at the expense of the students. Not a joke.
9. Young people are often confused.
(*) Trying to keep politics out of this. Anything I said about Mr. Trump I said on political forums using a different nomme du internet. I am merely stating some people in his administration are trying to reform the H1-B system, which would be good for workers. There are also Democrats who want to reform the H1-B system. Good luck to all of them in both parties.
(**) My daughter doesn't study engineering, but she has friends who do. She also found a way to get through school with zero student loans, but she wants to be a doctor which would mean $100k+ student loans for med school if she gets in. What happens if she goes to med school but washes out? That happens, and lots of would-be doctors wind up with HUUUGE student loans and no MD.