A college degree is the key to opportunity and economic success in America today, a fact that has brought new attention to questions of college access and affordability. Rising college costs and low levels of household savings mean that existing federal loan and grant programs cannot meet the needs of many students. The search for additional funds has spurred explosive growth in private, "nontraditional" student loans. The private student loan market, which was only an afterthought fifteen years ago, today accounts for 18 percent of all loans for postsecondary education. Although much attention is paid to federal loan and grant programs, this emergent sector has largely escaped careful scholarly analysis. Distributed by Syndetic Solutions, Inc.

List of Illustrations	ix
Acknowledgments	xi
Introduction	1
The Federal Loan Landscape	7
A Quick Guide to Key Actors	9
An Anachronistic System?	12
Overview of the Volume	15
1 Higher Education's Student Financial Aid Enterprise in Historical Perspective	19
Principles and Precedents: The Historic Roots of Financial Aid	20
The Principles and Pilot of the 1944 GI Bill	22
The 1947 Truman Commission Report: Access and Affordability	24
Some Landmark Developments of the Past Half-Century	26
The High Tide of Federal Student Financial Aid Programs: The 1972 Reauthorization of the Higher Education Act	28
Readjustments of Federal Student Aid Programs, 1978-90	34
Closing the "Tuition Gap" in Statewide Higher Education Planning: State Scholarships and Independent Colleges	35
Recent Trends	37
Conclusion: Connecting Past and Present in Policy Analysis	40
2 Opportunity Costs: The Politics of Federal Student Loans	42
Federal Student Loans: Actors, Organizations, and Issues	45
Institutions of Higher Education	46
Students	50
Lenders and Guarantors	52
The Higher Education Act, Forty Years On	59
The Path (Dependence) Ahead	68
Muddling Through	69
Fiscalization and Polarization	70
What's Next?	72
3 Private Lending and Student Borrowing: A Primer	74
Defining Private Loans	76
Profiling the Private Loan Industry	79
Understanding the Growth of Private Loans	83
Loan Limits and Rising Tuition	84
College Choice	86
Who Are Private Borrowers?	89
Recommendations for Federal and State Policymakers	91
4 The Demand Side of Student Loans: The Changing Face of Borrowers	99
College Loan Programs: The Supply Side	103
The Evolution of Federal Student Loan Programs	103
Current Federal Student Loan Programs	103
State and Institutional Loan Programs	107
Private Loan Options for Students	107
College Loans for Parents and Other Loan Options	108
The Characteristics of Borrowers	109
Borrowers by Attendance Pattern	110
Loan Demand by Type of institution	114
Borrowers by Income and Dependency	118
Borrowers by Race or Ethnicity	125
Concerns about Student Loans: Too Much or Not Enough Debt?	126
Trends in Cumulative Debt	126
Measuring the Burden of Debt	128
Too Much Debt? Concerns about the Effect of Debt Burden	130
The Loan Limit Debate	132
Not Enough Debt? The (Un)Willingness to Take Out Loans	133
Debt and College Dropouts	133
Conclusions	134
5 The Supply Side of Student Loans: How Global Capital Markets Fuel the Student Loan Industry	136
Student Loan Volume and Growth	137
The Student Loan Industry	138
Key Metrics: The Art and Science of Loan Losses	140
Key Metrics: Loan Value	143
Student Loan ABSs: A New and Rapidly Growing Asset Class	145
Student Loan ABS Investors	147
The Nuts and Bolts of Student Loan Securitization	149
Market Risks and Opportunities	150
Disclosure and Compliance	153
International Student Loan Market	154
Summary	156
6 Marketing Opportunity: Challenges and Dilemmas	157
Sallie Mae: "We're Big and We're Competitive"	165
First Marblehead: Behind-the-Scenes Giant	170
Banks and Private Loans	174
Consolidators: A New Kind of Business	175
MyRichUncle	176
Questions Raised	180
7 The End of Autonomy: How the Role of the Financial Aid Office Is Changing	182
An Accidental Profession	184
An Era of Free Agency	188
Losing Clout	190
Going Private	191
What's Best for Students	194
Interactions with the Loan Industry	196
Access and Influence	200
Conclusion	201
8 Thoughts on the Industry's Past and Present: An Insider's Perspective	203
The Perspective	204
A Brief Outline of Context	205
Concentration	205
Integration	206
Securitization	207
Consolidation	207
Private or Alternative Loans	208
An Alternative Path	211
A Necessary Reform	215
Conclusion	222
9 Projections for the Student Loan Industry	223
Federal Financial Aid Overview: Grants and Loans	223
Alternative Market Mechanisms	226
Impact of the Deficit Reduction Act	230
New Policies and Needed Reform	232
Growth in Alternative Student Loans	237
Considerations for the Future	240
Proposal #1 Repeal Tax Benefits and Increase Support for Pell Grants	241
Proposal #2 Privatize the Perkins Loan Program	243
Proposal #3 Auction the FDLP Portfolio	244
Proposal #4 Private Philanthropy	246
Conclusion	247
Appendix A Key Developments in the Federal Loan Sector	251
Appendix B Commonly Used Abbreviations and Acronyms	257
Notes	261
About the Authors	297
Index	301

Distributed by Syndetic Solutions, Inc.