(Video) This Is The Next Sub-Prime Crisis: Jim Rickards

The staggering cost of student loan debt is daunting — it tops $1 trillion.

Now there is new data showing that students are increasingly faltering under the weight of this debt.

Related: What’s Really Wrong with Student Loans

The U.S. Department of Education says figures reveal one in seven borrowers defaulted on their federal student loans. The default rate also rose to 14.7% from 13.4% the year before, the highest level since 1995 based on a related measure, according to Bloomberg News. (The report is for the three years to Sept. 30, 2012.)

In the above video, Jim Rickards, senior managing director at Tangent Capital and author of Currency Wars: The Making of the Next Global Crisis and the upcoming Death of Money, calls the student loan debt load the “next sub-prime crisis.”

Rickards makes his case based in part on the size of the debt and the nature of its underwriting.

Related: Yes, Despite the Student Loan ‘Crisis,’ College IS Worth It

You may ask how this comparison can be made when banks and financial firms were on the hook for the sub-prime loans while the government is on the hook for federal student debt. Check out the video to see Rickards explanation, and also, how he argues the government may be using student loans to stimulate the sluggish economy.

Source URL: http://finance.yahoo.com/blogs/daily-ticker/next-sub-prime-crisis-jim-rickards-123457426.html

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