Should the U.S. Make Billions from Student Loans?

Yes. The new federal student loan programs are great. The total repayment is capped at 10% of discretionary income, and forgiven after 20 years. Having the system yield a profit will keep the program viable and reduce the temptation to cut the benefits under the program. It's also fair--people who need loans for school (I.e. Who aren't so rich to begin with they can afford school out of pocket) are pooling the risk amongst each other.

I've heard a plausible argument that federally guaranteed student loans fueled a huge increase in the cost of college (http://nces.ed.gov/fastfacts/display.asp?id=76), and much of the increased income went to administrator salaries and new construction, rather than faculty.

Perhaps it's time to force colleges to compete on price.

That's a difficult question to answer. In the long term it's in the country's best interest for the government to subsidize college education, but perhaps not all degrees should be eligible.

The basketweaving degree mentioned here is a terrible example because there are legitimate degrees in fields where the average income makes it difficult or impossible to pay back the student loans to get it (Psychology, Early Childhood Education) - http://www.npr.org/blogs/money/2013/09/10/219372252/the-most...

It's just as crazy in Canada. The fixed interest rate on government backed student loans is prime +5%! That means that during a period of historically low interest rates, students are paying nearly 8% on their loans.

Why not prime? This is non-dischargeable debt, what is the risk to the lender? It's absurd.