Tuition and fees at both public and private colleges and universities have never been higher, and the cost of loans taken out by American students for higher education has never been greater. Close to 70 percent of college students graduate with debt, and the collective student loan debt in the United States in 2019 is now over $1.5 trillion. Many of the student debt holders face financial instability, hold down multiple jobs to make ends meet, and are forced to delay financial investments like homeownership and retirement savings. This debt has a wide effect not just on the student debt holders, but across the economy.
Adding to concerns over the student debt crisis are widespread reports of potential predatory lending practices (including the use of subprime loans with expected default rates as high as 92 percent) by student loan providers across the United States. In addition, borrowers face potentially unethical behavior from for-profit colleges and universities, which account for a disproportionately high share of student debt. Students who attend for-profit institutions are at higher risk of defaulting on their loans. In fact, 44 percent of borrowers at these schools faced some type of loan distress five years into repayment. These for-profit institutions are also much more likely to declare bankruptcy (95.5% of colleges that have closed since 2013 were for-profit), leaving students without access to a higher education or even credits that can be transferred to other schools.