Private banks are giving the loans out. When they do, they keep the interest, but shovel the default risk onto the treasury without paying them to do it. The

Private banks are giving the loans out. When they do, they keep the interest, but shovel the default risk onto the treasury without paying them to do it. The Dep't of Education also gives out direct federal loans and grants, and sometimes those private banks service those loans, but federal financing is now not quite enough to pay for a whole degree, so private loans are filling the gap, at greater expense to the students.