Student Debt and Higher Education Risk

55 Pages Posted: 22 Apr 2015 Last revised: 30 Jan 2016

See all articles by Jonathan Glater

Jonathan Glater

University of California, Los Angeles (UCLA)

Date Written: April 21, 2015


To borrow for college is to take a risk. Indebted students may not earn enough to repay their loans after they graduate or, worse, fail to graduate. For students who cannot pay for college without borrowing, this risk is both a disincentive and a penalty. Greater risk undermines the efficacy of federal financial aid policy that seeks to promote access to higher education. This Article situates education borrowing in the context of a larger, cultural and political trend toward placing risk on individuals, and criticizes this development for its failure to achieve any of the typical goals – such as particular public policy outcomes or prevention of moral hazard – of legislation that allocates risk.

The Article describes dramatic increases in student borrowing and explains the ill-effects of greater reliance on debt, which increases the riskiness of investing in higher education. The Article contends that recognizing that student debt is a mechanism that transfers risk bolsters criticisms of increased borrowing and suggests a consistent way to evaluate aid policy. The Article outlines an insurance regime, the logical response to undesirable or unmanageable risk, that could help preserve access to higher education while at the same time mitigating the downside risk of borrowing for college.

Suggested Citation

Glater, Jonathan, Student Debt and Higher Education Risk (April 21, 2015). California Law Review, Vol. 103, No.6, 2015, pp.1561-1614, UC Irvine School of Law Research Paper No. 2015-46, Available at SSRN:

Jonathan Glater (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

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