Companies which make loans to students–with $100,000 in loans for a four year degree even at mediocre colleges not being that uncommon–are GUARANTEED to get their money back. This has been the case for many years. You cannot make the loans go away in bankruptcy. Other than repayment, there is no means of avoiding these costs. This intervention in the private sector means that means testing is irrelevant: no matter how much someone overborrows, even if they will literally be in debt the rest of their lives–which means servicing the interest but failing to repay the principle–the loans will be made.
In the private sector, loans are made based upon the ability of people to repay them. If the student loan business had stayed in the private sectors–with both losses and profits borne ONLY by the lenders–then much less money would have been lent. With less money available, less money would have been borrowed, and the new outcome of this would have not been less students going to college, but less of the MASSIVE expansions we have seen in university infrastructure, size of the Administrative element, and the pay for the bureaucrats who run things.
Net: as with Fannie Mae–which was supposed to boost home ownership, but has instead contributed to a massive economic decline coupled with massive rates of foreclosure– a program intended to INCREASE college attendance has over time made it much more difficult, and forced most students either into de facto punitive loans, or foregoing college.
Now that the Federal Government owns the loans, things will not get any better. The interest rates that students pay will not go down, as that “income” was intended to help mask the actual costs of the horrifically bad Obamacare legislation.