Loans

Banks got so far in debt the government came in and bailed them out and this led to what is called a moral hazard meaning it encourages banks to take more risk. All of the smaller banks who watched their P's and Q's received zero help. This was considered unacceptable and steps were taken to make sure banks have better control over their investments. We are now faced with the same problem with student loans. Those who took on more debt than they could handle are being bailed out but those students who were more responsible about their finances and getting zilch. Since no rules about borrowing are being changed students will continue to take out excessive loans with the understanding that they will be bailed out. This again represents a moral hazard but this time with student loans. This whole loan program was the governments attempt to help with higher education but like so many programs there were unintended consequences. So now it has become political and all common sense goes out the window.