A new article in Fortune is defending the explosion in subprime student lending, with the following analysis:
It's tempting to draw parallels to the U.S. mortgage market. But the two markets, at close glance, are nothing alike. A blow-up in the student loan market would have few immediate consequences — and that is its biggest risk.
The most important distinction between the student loan and mortgage markets, apart from size (the mortgage market was nearly $11 trillion at the peak), is that the world's most creative lenders, big U.S. banks, are hardly involved. In mid-2010, the Department of Education began lending to students directly. Credit Suisse reckons the United States government now backs 88% of student loans.Sponsor Content