I've been arguing for some time that increased access to low-cost student loans and additional lending activity are the primary drivers behind today's skyrocketing tuition costs.
There is a fair amount of evidence to back this up, but it doesn't seem like anyone wants to admit this truth. The answer to rising college costs never seems to be "hey, let's use technology to lower barriers to entry, increase the quality of the education and cut the cost". The answer from policymakers is almost universally "hey, let's give students more debt so they can pay the higher tuition rates!!".
However, this article published yesterday raises some very real questions about another boom that is being fueled by student loan debt - commercial real estate and retail expansion.
" In a rarely reported development, the vast student-loan sector is helping prop up retail stores and travel companies in a bubble of spending around college towns across the country.
The concept of using student loan debt to pay for housing is not necessarily new, but using that money to rent a space off-campus from a large developer with many, many units around the country, is new.
Retailers have also seemed to pick up on this trend -
So, is this a direct transfer of wealth from students' loan balances to large retailers? No, but in much the same way that every town of 4,000 people NEEDED a Home Depot or Lowe's during the housing bubble, these retailers are positioning themselves to ride the wave of students attending college. If that conveyor belt of students gets disrupted - either by another financial crisis or by a shift in the education industry - these developers, retailers and by default, their bankers may be in trouble.