The student loan system should meet a variety of criteria, including access, accountability, efficiency, incentives, borrower protections, and affordability. Yet the historical and current student loan system underperforms. The best solution would be income-contingent lending by private lenders.

Key points:

  • The current student loan system fails along several important dimensions, including accountability and affordability.
  • Private income-contingent lending would be a dramatic improvement over the current student loan system.
  • For funding today’s college students, income-contingent lending is more promising than income share agreements.