I really don't think anyone can predict when this bubble bursts. There are too many political and cultural factors involved. Also, as employment prospects decline and remain dismal throughout our second "lost decade", I tend to predict more shelter-seeking "students", debts be damned.
People used to think of financial insolvency and bankruptcy as a shameful failure. Not any more. There's a widespread sense that money isn't real and that repayment of debt is somewhat voluntary. This is why people were willing to buy houses at prices of 20-30 years' after-tax income during the bubble. Also, the fact that unexpected medical problems (and insurance malfeasance) can make virtually anyone bankrupt eradicates the association of insolvency with personal failure; now it's something that can happen to anyone, like a lightning bolt from the sky.
The result is that, absent regulation, people will continue to take out loans for unaffordable education costs, default on their student debts (which are nondischargeable, but this doesn't prevent default, only discharge in bankruptcy) and maybe have their wages garnished a bit. So we have debt bondage, but when the alternative is economic nonexistence (Wal-Mart job) this starts to look pretty good. At least the guy in the low-end office job, with 20% of his meager pay garnished, can sit down at work.
TL;DR version: in other words, as things are now, if college tuition cost $100,000 per year and loan companies were willing to offer it, people would still buy it, future insolvency be damned. If you take this offer, you have hope of an eventual regulatory change ("jubilee") that forgives or at least makes dischargeable student debt. If you don't, you face economic obliteration, unless you're visibly (at 18) in the top 0.01% of your age group in something (computer programming, acting, athletics).
People used to think of financial insolvency and bankruptcy as a shameful failure. Not any more. There's a widespread sense that money isn't real and that repayment of debt is somewhat voluntary. This is why people were willing to buy houses at prices of 20-30 years' after-tax income during the bubble. Also, the fact that unexpected medical problems (and insurance malfeasance) can make virtually anyone bankrupt eradicates the association of insolvency with personal failure; now it's something that can happen to anyone, like a lightning bolt from the sky.
The result is that, absent regulation, people will continue to take out loans for unaffordable education costs, default on their student debts (which are nondischargeable, but this doesn't prevent default, only discharge in bankruptcy) and maybe have their wages garnished a bit. So we have debt bondage, but when the alternative is economic nonexistence (Wal-Mart job) this starts to look pretty good. At least the guy in the low-end office job, with 20% of his meager pay garnished, can sit down at work.
TL;DR version: in other words, as things are now, if college tuition cost $100,000 per year and loan companies were willing to offer it, people would still buy it, future insolvency be damned. If you take this offer, you have hope of an eventual regulatory change ("jubilee") that forgives or at least makes dischargeable student debt. If you don't, you face economic obliteration, unless you're visibly (at 18) in the top 0.01% of your age group in something (computer programming, acting, athletics).