Case 29: The Perils of Student Loan Debt
1. What are the ethical issues involved with student loans? How do these parallel issues that
were involved with the mortgage lending crisis of 2008/2009?
Lending large amounts of money to young students with little to no credit experience and no
income. This seems to parallel the issues involved in the mortgage lending crisis of 2008/2009
American dream of home ownership.
2. As a matter of public policy, should the federal government be getting involved in providing
these funds for education?
While it may be difficult for the government to provide funds for education, lower-cost lending
3. Who are the stakeholders involved in student lending?
The stakeholders involved in student lending include the lenders, the institutions, the
government, and American taxpayers.
4. Should large sums of money (tens of thousands of dollars) be loaned to students and parents
without any sort of credit check?
5. How can responsible lending take place in this sort of environment? Is it ethical and
responsible for private lenders to make such loans just because they are backed by taxpayers’
money?
It does not seem possible that responsible lending can take place in an environment that lacks
6. Should the federal government be involved in guaranteeing loans provided by private lending
groups? Why or why not?
The federal government should not be involved in guaranteeing loans provided by private
7. Should student loan forgiveness be limited to situations where a college has engaged in
deceptive practices? If so, why should taxpayers be responsible for bad judgments being made?
At this point in time, yes, student loan forgiveness should be limited to where fraud is concerned.
8. What do you think about the IDRP and PSLF programs for student loan relief?
The IDRP and PSLF programs represent important incentives that allow students with significant
debt the ability to afford to take nonprofit or government work. Assuming that students would be