Recent research from UChicago economists shows that students who are admitted to college earn more than their rejected peers, and that the gap between workers with and without a college degree is wider than ever. At the same time, the United States faces a student loan crisis, with over 45 million borrowers owing a total of over $1.6 trillion in borrowed federal dollars. What went wrong?

In this paper, the authors argue that federal policy is to blame. They describe a process by which policymakers weakened regulations that had constrained institutions from enrolling aid-dependent students, causing rising enrollment among relatively disadvantaged students at poor-performing institutions where students often failed to complete a degree, struggled to repay their loans, defaulted at high rates, and floundered in the job market.

The authors trace the history of federal lending from its advent in the 1950s to today’s crisis. Read their working paper, or keep scrolling for a summary: