The Origins of Student Loans

The creation of student loan programs can be traced back to the 1950s, when the government sought to increase access to higher education in response to the space race with the Soviet Union. Initially designed to target specific fields of study, the student loan programs quickly expanded, providing more students with loans. The program shifted from providing loans through banks to direct loans from the Treasury Department in the 1990s. The Great Recession in 2008 further fueled the demand for higher education, resulting in increased enrollment and rising tuition costs. However, the pandemic-era payment pause has brought into question the affordability of college education and the consequences of taking on excessive student loan debt.