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According to the DC think tank Bipartisan Policy Center, student loan debt has increased dramatically since 2007. In fact, more than 45 million people owe around $1.7 trillion in debt, and the likelihood of default is increasing. If this happens, the federal government is left on the hook. It is important to understand this crisis and how it impacts people, as well as how it can be repaired.

Greater Access to Student Loans

When more people have access to student loans, more people can get a college education. However, colleges and universities are aware of it and can raise their tuition. People aren’t likely to walk away from an overly expensive school because they can get the money to pay for it. The interest is the same for all students, no matter what their credit rating is, and these loans aren’t given based on an ability to repay.

State Support Has Declined

One of the reasons why student loan debt has increased is that state support for tuition and room and board has been declining for years. When there isn’t an option of grant money or other state assistance, students have little choice beyond borrowing the money. This has also led to an increase in student loan debt.

It’s Easy to Get a PLUS Loan

PLUS loans for undergraduate and graduate programs aren’t based on an ability to repay; they are based on the cost of tuition. These loans are available to parents who want to pay the tuition and other school costs. They have a higher interest rate than other federal loans, and they are too expensive for some to repay.

No Restrictions for Low-Quality Institutions

Unfortunately, poor-quality schools that are underperforming have access to these loans. The problem is that if students are getting a subpar education, they will have a harder time getting a job. Then they will have a higher likelihood of defaulting on the loan. Institutional accountability could make a difference.

The bottom line is that the students and their parents need to assess the loan, its value, and their ability to repay.