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Known as the G.I. Bill, this law provided benefits for WWII veterans. There were many benefits to the veterans including tuition to attend college or vocational schools. While these benefits were not student loans, they were the earliest form of student aid.
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The U.S. government created a limited student loan program in response to the USSR launching its Sputnik satellite. The U.S. feared the Soviet Union getting ahead in the space race and wanted its students to be competitive in math and science.
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As part of President Lyndon Johnson's Great Society, this law expanded student loans via banks. The loans were made through bank instead of the government to prevent did not want student loans as a government expenditure.
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This legislation created a market for student loans sponsored by the government. It is known as "Sallie Mae." It was privatized in 2004.
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President George H.W. Bush signed the reauthorization to establish a direct student loan program. When he took office, President Bill Clinton set up funding for student loans in a budget reconciliation act in 1993.
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Because banks were not as willing to make student loans during the economic downturn, the government took control of student loans and made them all direct. President Obama made 100% of student loans direct via the Health Care and Education Reconciliation Act of 2010 (Obamacare).
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As of 2016, student loan debt totaled over $1.3 trillion in the U.S. The average amount of debt per student is $35,000. About 16% of students are behind on their payments and 11% are in default
