Under the Barack Obama administration, the government has pretty much taken over the student loan business. Loans that might once have been made by banks (often with a federal guarantee) are now issued directly by the government. Proponents of this policy have hailed it as cutting out the middleman, arguing that the system even turns a profit. But all along, critics have quietly asked a question: What about risk? And now, as student loan volumes and delinquencies rise, those critics have gotten a little louder.
Under current conditions, the Congressional Budget Office estimates that the student loan program will remain profitable for the government, at least for the next 10 years. But that raises a couple of questions: What if those conditions change? And what happens outside the forecast window?