That is a serious question, worth asking. I'll try to summarize the arguments I've heard for justification for a government backed guarantee. 1) There's a wide

That is a serious question, worth asking. I'll try to summarize the arguments I've heard for justification for a government backed guarantee. 1) There's a widespread social benefit to having more highly educated citizens that won't be recouped by the institution making the loan. 2) The repayment term doesn't work well for very expensive professional degrees that confer huge long-term earning benefits, but aren't secured by those benefits (i.e.., it would make financial sense for a recent MD to declare bankruptcy to get out of $200k+ in med school bills, even though that person may be earning well over 300K/year for decades). In the end, I think it's all fallen apart, though. In fact, I think the wide availability of student loans has had the absolute opposite effect. If prices had stayed flat, the availability of low cost loans might have improved affordability, but as others have pointed out on this forum, prices inflated to reflect the wide availability large scale unsecured loans to people with no credit or collateral. As a result, the lower-cost approaches never emerged - instead of finding a way to offer a quality low cost education, universities figured out bigger and better ways to spend this new source of money. That alone would be bad enough, but these loans had a truly toxic element of not being dischargeable through ordinary bankruptcy. And now, add in the fact that most of the people taking these loans out were, by design, fairly young - we start college in the US around age 18, so many of the people encountering perhaps the most dangerous type of loan they'd ever encounter were signing paperwork and entering binding contracts maybe a week after they'd reached an age where they were permitted to do so as an adult! I agree that people need to take responsibility for the actions they take, especially as an adult, but this is... cruel. This is a really insidious trap, put out for people as they take their first steps out into the adult world of lasting consequences. I'm not saying this should be handled purely by the private sector... but seriously, if someone wouldn't touch a loan under standard bankruptcy laws with a 29 and a half foot pole... look, that should tell you something about the wisdom of subsidizing the loan though government programs. People need to pay their debts, but the credit system is kept in check by an incentive on the part of the lender not to be an idiot. This is why I and many people have a limited sympathy for lenders like credit cards. If you make a massive, unsecured loan to people with no assets and no reputation for paying their debts, well, there's a limit to how much the government is going to help you get your money back. The system works because lenders need to be careful about debt too. Yeah, this whole thing was a total disaster.