Because the governments good intentions of "everyone should be able to go to college" changed the structure of student loans with a predictable negative impact.
Previously a bank would assess the risk of loaning someone money, and they determined that your typical18 year olds with no credit history and no collateral is not a risk worth issuing a loan. The government steped in and says to the bank: you lend these kids the money, and if they default, we will buy the loan. Also they wont be able to discharge the loan through bankruptcy [a Biden bill pushed by his Delaware bank buddies nonetheless]
This removed the risk from the banks, who started handing out loans like candy knowing they will get paid either by the student or government. Colleges started jacking up their prices (the majority of costs were admin fees) because they too know they will get the money no matter what.
And here we are with college tuition spiking 400% or so in the last 25 years.
The bigger question is why did the cost of education go up so much that people need a loan for it now?
Because dumb teenagers can borrow essentially unlimited money guaranteed by the Federal Government!
Why not increase prices 5x faster than the rate of inflation when the people paying you get that money for "free"?
Obamacare.
Because the governments good intentions of "everyone should be able to go to college" changed the structure of student loans with a predictable negative impact.
Previously a bank would assess the risk of loaning someone money, and they determined that your typical18 year olds with no credit history and no collateral is not a risk worth issuing a loan. The government steped in and says to the bank: you lend these kids the money, and if they default, we will buy the loan. Also they wont be able to discharge the loan through bankruptcy [a Biden bill pushed by his Delaware bank buddies nonetheless]
This removed the risk from the banks, who started handing out loans like candy knowing they will get paid either by the student or government. Colleges started jacking up their prices (the majority of costs were admin fees) because they too know they will get the money no matter what.
And here we are with college tuition spiking 400% or so in the last 25 years.
It is an industry, now.