Validity of Public Non-Profit Lenders and an Examination of Market Failures in Student Lending

Abstract

Federal student loans have been a hot topic since their inception in the late 1950’s. Since that time, student loans have grown into a multibillion dollar business. Recent industry trends have shown that private for-profit lenders have been increasing their market share through acquisitions and take-overs of publicly formed non-profit lenders. This analysis examines the validity of these non-profit public lending institutions, whether they fulfill a market need, whether a market failure exists in student lending, and shows that their presence provides substantial benefits for both borrowers and taxpayers.