Download PDF Outstanding U.S. student loan debt is now estimated at over $1 trillion. The problems of student loans are generating sharp debate, including claims that they represent a new credit bubble. Colleges (and all purveyors of post-secondary education) arguably receive the greatest benefits from student loans, since they pump up colleges’ revenues with no credit risk and allow colleges to keep increasing their prices and expenses. Meanwhile, many students graduate — or even worse: drop out — with mountains of debt and unattractive or no job prospects to boot. Even more dismal is the fact that defaults on student loans are high.
American colleges in effect practice the “originate and sell” model of lending, while the price of their product keeps going up. This practice is reminiscent of the mortgage bubble that has brokered loans and escalating housing prices. One possible improvement would be for colleges to retain “skin in the game” for student loan credit risk, which is the same treatment Congress has prescribed for mortgage lenders. This event addressed the problems and improvements needed for student loans, beginning with a keynote presentation by former secretary of education Bill Bennett and including this presentation from AEI Resident Fellow Ed Pinto.
What's new on AEI
|AEI Election Watch 2014: What will happen and why it matters|
|A nation divided by marriage|
|Socialist party pushing $20 minimum wage defends $13-an-hour job listing|
We welcome you to join us for a panel discussion of the undersea military competition occurring in Asia and what it means for the United States and its allies.
AEI’s Election Watch is back! Please join us for two sessions of the longest-running election program in Washington, DC.
We welcome you to join us at AEI for a discussion of what’s next for the Common Core.
Please join AEI for a discussion examining each candidate’s platform and prospects for victory and the impact that a possible shift toward free-market policies in Brazil might have on South America as a whole.