The United States has been at the forefront of a global shift away from direct state funding of higher education and toward student loans, and student debt has become an issue of growing social concern. Why did student loans expand so much in the United States in the 1990s and 2000s? And how does organization theory suggest their expansion, and the growth of federal student aid more generally, might affect higher education as a field? In the 1960s and 1970s, policy actors worked to solve what was then a central problem around student loans: banks’ disinterest in lending to students. They did this so well that by 1990, a new field of financial aid policy emerged, in which all major actors had an interest in expanding loans. This, along with a favorable environment outside the field, set the stage for two decades of rapid growth. Organization theory suggests two likely consequences of this expansion of federal student loans and financial aid more generally. First, while (public) colleges have become less dependent on state governments and more dependent on tuition, the expansion of aid means colleges are simultaneously becoming more dependent on the federal government, which should make them more susceptible to federal demands for accountability. Second, the expansion of federal student aid should encourage the spread of forms and practices grounded in a logic focused on students’ financial value to the organization, such as publicly traded for-profit colleges and enrollment management practices.
The authors would like to acknowledge helpful feedback from Dan Hirschman, Catherine Paradeise, and an anonymous reviewer. A previous version of this paper was presented at the Peking University–University of Wisconsin workshop, “Lessons Learned: International Collaboration and Competition in Higher Education, Science, and Technology,” in Beijing in May 2015. All remaining errors are our own.
Berman, E.P. and Stivers, A. (2016), "Student Loans as a Pressure on U.S. Higher Education", The University Under Pressure (Research in the Sociology of Organizations, Vol. 46), Emerald Group Publishing Limited, Bingley, pp. 129-160. https://doi.org/10.1108/S0733-558X20160000046005
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