Metaculus Help: Spread the word
If you like Metaculus, tell your friends! Share this question via Facebook, Twitter, or Reddit.
When will the student loan debt bubble "pop"?
It's an open secret that student loan debts are crippling millions of Americans – particularly Millennials.
CNBC estimated that nearly 3 out of 4 college grads leave school "with a significant amount of loans" and estimates that Americans have around $1.5 trillion in student debt, collectively. That's "trillion" with a "T". See this link for additional up-to-date numbers.
In November 2017, Rolling Stone columnist Matt Taibbi reported on the crisis in apocalyptic terms:
The average amount of debt for a student leaving school is skyrocketing even faster than the rate of tuition increase. In 2016, for instance, the average amount of debt for an exiting college graduate was a staggering $37,172. That's a rise of six percent over just the previous year. With the average undergraduate interest rate at about 3.7 percent, the interest alone costs around $115 per month, meaning anyone who can't afford to pay into the principal faces the prospect of $69,000 in payments over 50 years.
Many independent financial analysts believe this situation is untenable.
In April 2017, a Financial Times analyst observed that "In an eerie echo of the housing crisis, debt is already flowing out of the private sector, and into the public."
Billionaire Mark Cuban has said straight up: "I think the student loan bubble is going to burst."
Clearly, some change is due. But when exactly will this bubble "burst"? We'll define this popping as a jump in the student load default rate. Those rates are tabulated various places, but depend a lot on the timescale. For example official Federal student loan default rates define a 3-year rate, which is at 10.8% for fiscal year 2015, by
A cohort default rate is the percentage of a school's borrowers who enter repayment on certain Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan (Direct Loan) Program loans during a particular federal fiscal year (FY), October 1 to September 30, and default or meet other specified conditions prior to the end of the second following fiscal year.
A longer-term study looks at default rates for 1996 and 2004 cohorts and finds that of those who took out loans, 18.2 and 27.2%, respectively, had defaulted 12 years later.
In what year (if ever) will the 3-year rate, as defined above, reach 20% OR the 12 year rate reach 40%?
In each case the resolution date is defined by the middle of the year at the end of the interval in question. Resolution is by govt. or private numbers comparable in methodology and results to the above two reports.
Metaculus help: Predicting
Predictions are the heart of Metaculus. Predicting is how you contribute to the wisdom of the crowd, and how you earn points and build up your personal Metaculus track record.
The basics of predicting are very simple: move the slider to best match the likelihood of the outcome, and click predict. You can predict as often as you want, and you're encouraged to change your mind when new information becomes available.
The displayed score is split into current points and total points. Current points show how much your prediction is worth now, whereas total points show the combined worth of all of your predictions over the lifetime of the question. The scoring details are available on the FAQ.
Note: this question resolved before its original close time. All of your predictions came after the resolution, so you did not gain (or lose) any points for it.
Note: this question resolved before its original close time. You earned points up until the question resolution, but not afterwards.
This question is not yet open for predictions.
Metaculus help: Community Stats
Use the community stats to get a better sense of the community consensus (or lack thereof) for this question. Sometimes people have wildly different ideas about the likely outcomes, and sometimes people are in close agreement. There are even times when the community seems very certain of uncertainty, like when everyone agrees that event is only 50% likely to happen.
When you make a prediction, check the community stats to see where you land. If your prediction is an outlier, might there be something you're overlooking that others have seen? Or do you have special insight that others are lacking? Either way, it might be a good idea to join the discussion in the comments.
Embed this question
You can use the below code snippet to embed this question on your own webpage. Feel free to change the height and width to suit your needs.