Student loan debt has ballooned to epic proportions over the last 20 years. The total amount of outstanding student loan debt in the United States today stands at over $1.2 trillion. What’s worse, the outstanding amount has been expanding roughly linearly for the last two decades. It would appear to be a trend that is simply not sustainable.
Student loan debt was, once upon a time, a tool for post-grads who had a high probability of landing an extremely well-paying job. However increasingly, becoming seriously indebted by student loans has become a perverse rite of passage for nearly all high school graduates. This raises a number of serious questions.
The first is whether or not attending college is even worth the almost certainty that in order to graduate, one must rack up tens of thousands in student debt. In an increasingly competitive and automated economy, the prospect of not being able to find a job after running up tens or hundreds of thousands in student debt is not just more likely than ever, it’s utterly disastrous to the debtor.
Another serious question is what will happen when the inevitable wave of defaults - some argue it is already happening - starts kicking in, leaving the debt holders and underwriters on the hook for billions in non-collectible debt. Many economists agree that the student loan sector already has all the tell tale signs of an outright bubble.
White hat methods
The best way to avoid student loan debt is simply never to take out a student loan. This may sound too obvious to mention but there are some subtleties and advantages to never taking on student debt that are worth pointing out.
First, the price of a college education has roughly quintupled since the mid 60s. However, the quality of education has arguably not increased at all. In fact, many would say it has declined. This leaves a situation where, especially for the very smart and talented, paying $300,000 or more for a paper credential is a transaction with rapidly diminishing returns.
In the gig economy, those who can code, create music or design websites can quickly make good money, just based on raw talent, no credentials required. And it’s arguably the best time in U.S. history to be an entrepreneur. If you want to be an airline pilot or heart surgeon, you’ll have to bite the bullet and pay tuition, one way or another. But if you don’t want a traditional career and you’re ambitious and smart, college is far from the automatically optimal career path.
A whole book could be written on this topic. One idea: Open a bank account in Canada. It’s that simple. Don’t want to pay back that student loan? Put all of your assets in Canada, they can’t touch them there. Opening an account is easy for U.S. citizens and Canadians will cooperate with the U.S. government on criminal matters but won’t on almost anything else.