Stacy Cowley

So the moment when everything changed was in 2010. As part of the Affordable Care Act, weirdly enough. So President Obama wanted to pass the Affordable Care Act, this very massive and expensive change in the health care system. And the government went looking for what it calls pay-fors. It went looking for ways to— Revenue generators. Exactly.

So the moment when everything changed was in 2010. As part of the Affordable Care Act, weirdly enough. So President Obama wanted to pass the Affordable Care Act, this very massive and expensive change in the health care system. And the government went looking for what it calls pay-fors. It went looking for ways to— Revenue generators. Exactly.

Things that they could put into the budget and say, look, we're now making money, so this is going to balance out. And this was the area they zeroed in on.

Things that they could put into the budget and say, look, we're now making money, so this is going to balance out. And this was the area they zeroed in on.

Well, that was the calculation. The Congressional Budget Office and other financial analysts came back and said, if you take this in-house, if you start making these loans directly and keeping the profits from them, that's going to generate tens of billions of dollars over the next decade for the government. And for the first few years, that is how it starts to play out.

Well, that was the calculation. The Congressional Budget Office and other financial analysts came back and said, if you take this in-house, if you start making these loans directly and keeping the profits from them, that's going to generate tens of billions of dollars over the next decade for the government. And for the first few years, that is how it starts to play out.

And then that starts to change. For kind of two reasons. The first is that the amount of money people owe starts to really surge. And that both makes it significantly harder for them to pay it off. You start to see more defaults and more people struggling with this debt. And it also starts incentivizing the government to look at ways to make it more affordable.

And then that starts to change. For kind of two reasons. The first is that the amount of money people owe starts to really surge. And that both makes it significantly harder for them to pay it off. You start to see more defaults and more people struggling with this debt. And it also starts incentivizing the government to look at ways to make it more affordable.

So you start to see them introduce more loan forgiveness programs, more repayment options that are more generous and more flexible. Things where it means that the government starts to be subsidizing this program.

So you start to see them introduce more loan forgiveness programs, more repayment options that are more generous and more flexible. Things where it means that the government starts to be subsidizing this program.

The math on this starts to change and this moves from being an income center to the government to an area of projected losses.

The math on this starts to change and this moves from being an income center to the government to an area of projected losses.

Absolutely. That's been a running conversation for at least 20 plus years. Even before the government pulled this all in house, there was concerns from economists and policy analysts that this was driving the cost of tuition going up. Again, there's no other loans that really work like this. If you're borrowing for your undergraduate degree, you can borrow tens of thousands of dollars.

Absolutely. That's been a running conversation for at least 20 plus years. Even before the government pulled this all in house, there was concerns from economists and policy analysts that this was driving the cost of tuition going up. Again, there's no other loans that really work like this. If you're borrowing for your undergraduate degree, you can borrow tens of thousands of dollars.

And if you're borrowing for a graduate degree, you can borrow basically an unlimited amount of money. There's no test of are you likely to be able to make enough to pay this? So that's how you get to a place where when you basically hand students and really hand the schools a blank check, suddenly the price goes up a lot.

And if you're borrowing for a graduate degree, you can borrow basically an unlimited amount of money. There's no test of are you likely to be able to make enough to pay this? So that's how you get to a place where when you basically hand students and really hand the schools a blank check, suddenly the price goes up a lot.

The answer to all of that is it's unclear. There's a lot of different options for how you could change the system if you were going to. You could simply go back to the pre-2010 system and just say this is the banks and we're just here to backstop it. So that's one possibility. As for tuition, I think people think the biggest issue there would be capping the amount that people can borrow.

The answer to all of that is it's unclear. There's a lot of different options for how you could change the system if you were going to. You could simply go back to the pre-2010 system and just say this is the banks and we're just here to backstop it. So that's one possibility. As for tuition, I think people think the biggest issue there would be capping the amount that people can borrow.

Banks or the government or someone coming in and putting a limit in place because that would force the schools to respond to that. Right now, a lot of what's driven tuition is that they can do it. And nobody is sort of forcing the price constraint here.

Banks or the government or someone coming in and putting a limit in place because that would force the schools to respond to that. Right now, a lot of what's driven tuition is that they can do it. And nobody is sort of forcing the price constraint here.