The True Student-Loan Racket

President Obama is planning to change the ways that students obtain loans, with more funds coming directly from the government rather than through subsidized lending. But the fundamental issues surrounding college loans aren’t going to change. They are worrisome.

If you are a taxpayer, you might be surprised at how generous the government is in providing loans and how lax about repayment. If you are a student, you should know that government policies change your incentives: they encourage you to borrow more than you should, to hold on to the loans for years without repaying them, and even to enter jobs that you wouldn’t otherwise have picked.