[msprague]

Except that you can't declare bankruptcy and walk away from a student loan, like you can with a house. The idea of a bubble bursting is the idea that all of the money will disappear at once, but instead what will happen is people will be plagued with debt that they can't repay quickly causing long term growth problems because the college graduates will have less spending money.

[kdragon]

I get your point at least. While one could argue that student loans are in a speculative bubble (in regards to their actual value), existing bankruptcy laws prevent the bubble from bursting.

Part of the collateral for student loans is, technically, your economic freedom. It's easier for banks to assume you will pay the principal of your debts, when government is the acting collection agency. It's very difficult to escape garnished wages.

However, if something changes and people have a way to shed their student loan debts, I think the bubble will pop very quickly.