Debt Collection Expert of Rapid Recovery Solution Says Student Debt Bubble Mirrors the Housing Bubble

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Following recent reports that discuss the parallels between the student debt crisis and the recent housing crisis, debt collection expert John Monderine issues a statement, saying that the student debt treadmill is part of a wider systemic problem.

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Since the majority of the debt is held by the government and not by financial institutions, the question of stability is less urgent with respect to college debt. Still, a bubble is a bubble, and underwriters and policymakers both need to act responsibly.

On May 22, 2013, John Monderine, CEO of the debt collection agency Rapid Recovery Solution, responds to reported comparisons between the student debt crisis and the recent housing crisis.

According to a May 10th article in USA Today, “Bankers: College debt bubble mimics housing bubble,” the Federal Advisory Council has warned the Federal Reserve that the rising prices of farmland are inflating "a bubble" and the growth in student loan debt has “parallels to the housing crisis,” which is said to have been the primary cause of America’s Great Recession.

“Their alarm comes at a time when financial heavyweights on the Federal Open Market Committee, the Federal Reserve's policy-making arm, are debating whether the benefits created by their monthly purchases of $85 billion in bonds outweigh the risk of financial instability.”

The question is whether or not the program will help or hinder economic recovery in the long run – some fear that “the extended period of low interest rates is increasing the risk of asset bubbles.”

“As for student loans,” says the article, “recent growth has pushed debt levels to nearly $1 trillion, meaning it ‘now exceeds credit-card outstandings and has parallels to the housing crisis,’ the council [said]. The bankers told the FOMC that student lending exhibited characteristics similar to those seen in the housing crisis, including ‘significant growth of subsidized lending in pursuit of a social good’ — in this case, higher education rather than expanded home ownership.”

John Monderine, CEO of the debt collection agency Rapid Recovery Solution, says that student loans are pushing up the ceiling of student tuition. But the comparison to mortgage lending is misleading, says Monderine, pointing out that “Since the majority of the debt is held by the government and not by financial institutions, the question of stability is less urgent with respect to college debt. Still, a bubble is a bubble, and underwriters and policymakers both need to act responsibly.”

Founded in 2006, Rapid Recovery Solution, Inc. is headquartered at the highest point of beautiful Long Island. Rapid Recovery Collection Agency is committed to recovering your funds. We believe that every debtor has the ability to pay if motivated correctly. We DO NOT alienate the debtors; we attempt to align with them and offer a number of ways to resolve not only your debt but also all their debts.

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