When last we checked in on America’s enormous student debt bubble it was … well … it was still an enormous bubble.

Specifically, the amount of outstanding student debt in America is now larger than the entire USD junk bond market:

So you know, that’s a shitshow and by that, we mean all of those student loans are never – ever – going to be paid off. As in you can just forget about it. It’s not going to happen.

The question then, is not “how are current and former students ever going to pay this off?” (again, they’re not). Rather, the question is precisely that posed in the piece we ran three weeks ago. Namely this: Who’s Going To Defuse The $1.3 Trillion Student Loan Bubble?

Implicit in that title is the idea that this is a ticking time bomb, but not necessarily for the financial system because after all, most of this debt is guaranteed by the government. Here’s what we said in the above-linked post:

The good news for the financial sector is that out of the $190 billion in securitized student debt, $150 billion of it is guaranteed by the government. The majority of student debt not securitized is also guaranteed by the government and so, there’s limited risk for the financial system. I guess.

The bad news is that this massive burden of student debt has implications for all kinds of things, not the least of which is household formation and as Goldman goes on to note, “the substantial majority of student loan default risk is borne by the US Treasury.” So it’s borne by taxpayers.

That household formation bit is critical. Consider this chart from Wells Fargo:

“The transition to homeownership continues to face a number of hurdles. Most immediately, a lack of starter homes on the market has limited buying opportunities and driven prices up faster than incomes,” the bank writes, in a note dated earlier this month, before adding that “student loan debt remains an even more formidable challenge to ownership [as] college goers who graduated with student debt have lower rates of homeownership than their peers who graduated without student loan debt.”