It's a walk on the wonky side, but Te-Ping Chen has a great article on how there isn't really a student loan crisis. Rather, we've been having a student lender crisis, in which lenders couldn't access capital at the same firesale rates they'd been used to, and began threatening to pull out of the program. But that just lets the U.S Treasury's Direct Loan program kick in (by law, it can only be used when private lenders abandon students). This, as you may imagine, is causing students lenders immense suffering. "Because the DL program, unlike [private lenders], makes its loans directly from the U.S. Treasury, it isn’t subject to the vagaries of the asset-backed security market. Meanwhile, because it cuts out the middleman, for taxpayers, the DL program is less costly as well -- about five times cheaper per loan, according to the Government Accountability Office." Can't have that, now can we? Correction:: A couple of you helpfully e-mailed to explain that I misunderstood the relationship between the direct loan program and the private programs. Schools could choose, and the scandal was basically about the incentives financial aid officers were given for choosing private lenders.
