A Risk Sharing Proposal for Student Loans

Title: A Risk Sharing Proposal for Student Loans

Author: Tiffany Chou, Adam Looney & Tara Watson

Source: The Hamilton Project

Authors of a recently released policy brief by The Hamilton Project argue that institutional accountability in the federal student loan program has weakened.

As a solution, the authors propose the use of risk-sharing based on cohort repayment rate to increase institutional accountability. Under their proposal, underperforming institutions would be assessed a penalty dependent upon student progress in repaying federal loans within the first five years of leaving the institution. Further, the revenue from the risk-sharing program would be used to fund a mobility bonus system to reward institutions serving low-income students well.

To learn more and read the full policy brief, please visit The Hamilton Project’s website.