From November 2013 through November 2014, the aggregate balance in the federal direct student loan program–as reported by the Monthly Treasury Statement–rose from $687,149,000,000 to $806,561,000,000, a one-year jump of $119,412,000,000.
The balance on all student loans, including those from private sources, exceeded a trillion dollars as of the end of the third quarter, according to the Federal Reserve Bank of New York.
This is federally-owned debt; total student loan debt is roughly $1.3 trillion. Think this may be a bubble? Smart money says yes.
Here are my recommendations about student loans:
- Don’t ever take out a student loan, unless you’re using the money to buy a degree in engineering or computer science.
- Even if your degree is in one of the above fields, you still need to think twice about it. Student loan debt isn’t dischargeable through bankruptcy, and sometimes the government can confiscate the money without even having to sue you first. Whatever money you borrow, you will have to repay no matter what.
- Don’t count on a bailout from the federal government. There is periodic talk about “student loan forgiveness,” and it is technically possible. As a political issue, that’s a possibility. However, as a personal discipline issue, if you’re even thinking about a bailout, that’s a sure sign you shouldn’t take on the debt.
- If you already have student loan debt, repay it as quickly as possible. Then move on with your life.