Financial Aid

Looking for the next debt bubble

As of June 30, total household indebtedness was $12.29 trillion, 10.2 percent above the recent low of 2013, but 3.1 percent below the peak seen in 2008. But not all debt is created equal. In fact, every time the Federal Reserve Bank of New York releases its quarterly report on household debt, various media outlets report on the findings with scary headlines suggesting that a new bubble has inflated around a different type of debt, and that bubble is about to burst.

The most obvious candidate for the next bubble is student loan debt, which has ballooned to $1.26 trillion. To put that in perspective, federal student loan asset levels stayed at about $100 billion from 1995 to 2010, but...