system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: The student debt bubble. What makes it, or anything, a "bubble," what will cause it to burst, and what are the implications of it bursting?
gpt
In the case of student loans, it's simply **wrong terminology.**

An economic bubble happens when the price of an asset increases quickly due to *speculative demand*, which means that people are buying it and willing to pay higher and higher prices (and even go into debt to finance it) because they see the price rising and expect to profit from further increases. Many will even do this knowing what is happening, but hoping to sell to someone less aware before the bubble bursts (the "greater fool" theory). At some point, the price is obviously unrealistic, lots of people know it and are waiting for the right time to sell. At that point, any decrease in price can trigger an avalanche of panic selling that drives down the price further, the same mechanism that drove it up, but in reverse and quicker.

As you can see, **student loans are not a bubble**, because you cannot sell a degree you have, or profit from it becoming more expensive. Your degree from 5 years ago doesn't become more valuable because people right now are paying more for it, and you won't get another one in the hope of prices increasing further.

There are some superficial similarities which cause people to use the wrong terminology: 

* there are some factors (competition for prestigious schools, easy to obtain loans) which have pushed tuition at *some* institutions unreasonably high
* many people are going into debt to finance it, and 
* some of them won't profit from it the way they expected and be unable to pay back the debt. 

But that doesn't make it a bubble - you can still get a degree for a reasonable price, just not at a prestigious private university with lavish dorms and gyms. Many people still manage to leverage prestigious degrees into high paying jobs that make the degree "worth it". And it won't burst catastrophically. More people will realize that playing the "get into deep debt for a degree in the hope it can guarantee a sufficiently high paying job" game is too risky to bet your life on it, and will scale down their ambitions. Some schools will have to reduce tuition and cut costs to stay competitive. And the government will probably rethink the conditions for student loans and find a way for people who have no hope of ever paying them back to get out of them, because having people in perpetual unsurmountable debt is an overall loss for society (that's why bankruptcy exists in the first place).