US student loan debt totals $1.77 trillion across 43+ million borrowers. Average debt at graduation: ~$37,000. This didn't happen by accident — it's the structural result of specific policy choices.

The mechanism: federal student loans are guaranteed by the government, which means: (1) Colleges face no risk — they get paid regardless of whether graduates can repay. (2) Lenders face no risk — the government guarantees repayment. (3) Students bear all risk — and uniquely, student loans are almost impossible to discharge in bankruptcy (changed by the 2005 BAPCPA).

With risk removed from colleges and lenders, tuition inflated dramatically. Since 1980, college tuition has increased 1,200% — 4x faster than inflation. The guaranteed loan system gave colleges a blank check funded by students' future earnings.

The Bennett Hypothesis (William Bennett, Secretary of Education, 1987): increases in financial aid cause colleges to raise tuition. Evidence supports this — every dollar of increased federal loan availability corresponds to roughly 60 cents of tuition increase. Students don't benefit from more available loans — colleges capture the increase.

The bankruptcy exclusion is the system's enforcement mechanism. Medical debt, credit card debt, business debt — all dischargeable in bankruptcy. Student loans: almost never. This means the lending industry faces essentially zero default risk, which is why they lend freely to 18-year-olds with no income, no assets, and no credit history — a demographic that would be denied any other loan of this size.