How America’s student-debt problem got so big

The Evolution of Student Loan Programs

The discussion highlights the origins of the federal student loan programs, beginning with the National Defense Education Act, introduced in response to the Soviet Union's advancement during the Cold War. This initial program aimed to provide loans primarily for science and engineering students, but over time, it grew to include lower-income students who were increasingly using these loans. The Guaranteed Loan program established in 1965 expanded access and eventually placed more burden on students from lower socioeconomic backgrounds who could easily become overwhelmed by debt. The evolution continued with the transition to direct government lending, purportedly to lower costs, but this model has ultimately led to significant financial losses for taxpayers and borrowers alike.