I am not sure why this is a "crisis." It is unwise to ever borrow - or lend - money if there is a reasonable concern about repayment. Nonetheless, people often do it.
Now that politicians have defined it as a crisis, they want to pander and to throw OPM at it and to do all the things pols do.
As Reynolds and many others have been explaining for years, there is a bubble in the pricing of higher ed. There will never be enough money to satisfy them, and loans and grants perpetuate the situation. It is a scandal, really, between the pricing and the little return from so many schools which are little more than diploma mills for recreating youth.
I would propose two simple solutions: eliminate federal loan guarantees, and permit student loans to be discharged in bankruptcy. This would normalize the debt and lending mess in higher ed, and would force pricing downwards.
Have you ever pored over the balance sheet of an institution of higher ed? If you get the chance, prepare to be shocked.
Here's one proposal: How to Fix the Student Debt Crisis - Stop loaning money to students; loan it to colleges instead.
Why is college so expensive? Three main reasons. First, because colleges, with enthusiastic support from politicians of all stripes, have convinced Americans that higher education is the ticket to success. While a college degree is no longer a badge of the upper class, it is still viewed as a luxury good and is priced accordingly. Second, colleges have joyfully suffered from what Andy Rosen, CEO of the testing and online-education company Kaplan, has called “an edifice complex.” Colleges, including lots of state schools, continue to build luxury dorms, gourmet dining rooms, and lavish athletic centers to attract students—almost as if academics were an afterthought. Staffs have become bloated, too, not with more professors, but with administrators. Third, colleges have been playing with other people’s money. Washington has pumped trillions into financial aid programs. Low-income families get outright grants; everyone else qualifies for easy-to-obtain loans.
