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Why not the banks who are giving out the risky loans? They know a degree in underwater basket weaving isn't going to pay off a $100k loan. In most other circumstances a bank does a risk analysis. And it isn't like they don't know what degree the borrower is pursuing.

While the banks are giving money the universities are incentivized (because they are profit seeking) to increase prices and provide overpriced degrees.

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Student loans are guaranteed by the federal government, right? Thats why banks dont care. Its just the private student loans banks worry about.

correct: https://studentaid.ed.gov/sa/

this is the subprime bubble all over again, with the govt providing a risk free opportunity for private entities to maintain the insane price runaway until it all comes crashing down.

Incorrect. The private loans are no longer guaranteed by the government: https://en.wikipedia.org/wiki/Student_Aid_and_Fiscal_Respons...

Yes. But my problem with it is that this rule was written as a solution for a problem whose roots dig far deeper and need to be addressed there, not at this level. Making this an unintended side effect. But I think you need to address the real problem too.

You mean the fed? Because banks wouldn't be giving these loans if they were guaranteed.

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