SUMMARY
This paper addresses the question of why the student loan crisis has arisen through the use of a demand and supply model. The model serves as a framework for analyzing the student-borrower motivations (the demand side), the bank-lender motivations (the supply side), externalities that motivate government support for student loans, and the perverse incentives government regulations spawn for educational institutions and lenders. Analysis of the model reveals that the crisis is driven by students desire to increase their socioeconomic standing, by banks search for profits in a climate of decreasing risk, and by the governments efforts to lessen the impact of externalities.