Student Loan Debt Causing a Big Threat to the Credit Market

kim kardashian

On CNBC news, CEO and Co-Founder of Street Cred Louis Berly and “Shark Tank” investor Kevin O’Leary have a heated debate about the massive threat student loans have to the credit market.

Street Cred is one of the largest lenders in coding bootcamps, student loan refinancing and personal lending.

Berly reports he is lending to all students as long as they have merit. He describes “merit” as, “people who are paying their bills on time, not revolving their credit card balance saving for the future.”

Since most 18 year olds have yet to build up any of these requirements, 90% of the students receiving loans from Street Cred are ages 22-34 years old and already have graduate degrees.

The CNBC reporter notes, “The student loan problem can potentially be worst than the mortgage loan problem that created the financial crisis” back in 2008.

Kevin O’Leary argues that the guidelines to get a loan should be based on the degree you are seeking in college. He argues that the student should have a degree in a field where a job is almost guaranteed once they graduate in order to pay off the loans.

“This is the elephant in the room. If you spend $65,000 in loans getting a liberal arts degree and you become an expert in Greek mythology and no one wants to hire you, is that a good investment versus being an engineer for the same price,” he discusses.

Berly himself studied engineering as an undergraduate and left school $100,000 in debt. He said doctor’s leave school with $140,000.

Berly argues with O’Leary, saying it does not matter what they major in because their rates will be affected after they graduate and have a job.

The ultimate debate comes down to if the economy needs these restrictions to prevent it from plummeting because of students not being able to pay back their loans.

This has been an ongoing worry. New York Fed President William Dudley said in November of 2014, “That’s what we’re seeing with student loans, and it’s what we saw with housing to the extent that student loan burdens become very, very high, there are presumably going to be losses” to the federal government.

As for now, it is a waiting game to see if students respond to this crisis and began to think about their financial responsibilities before the time comes that they have to start paying off their student loans.





Image Via Flickr/Kevin Dooley


About Priscilla Manzo​

I am inquisitive by nature. An avid reader. Writing is a second nature, it tames my insanity. I have so much to say, so much to express. As a writer for StyleFT, I dabble in in all subject matters. As in the words of E.L. Doctorow; “Writing is a socially acceptable form of schizophrenia.” - In support of my work, you may kindly comment and share. Your ideas and feedbacks are welcome.

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