Date of Award
Spring 2018
Degree Name
Bachelor of Science (BS)
Advisor(s)
Paul Lynch
Abstract
This paper examines the federal student loan pricing model in light of the subprime mortgage crisis, questioning the sustainability of uniform pricing without accounting for risk factors that could lead to loan default. The study delves into the historical context of federal student loans under the Higher Education Act of 1965, highlighting its role in promoting accessibility to higher education but critiquing its disregard for financial and labor market dynamics. Through a comprehensive analysis of various risk factors—ranging from institutional characteristics to student behaviors and socioeconomic backgrounds—the research proposes the implementation of a risk-based pricing model. Such a model promises to align more closely with labor market needs through price signaling, potentially reducing default rates and enhancing market sustainability. The study emphasizes the multifaceted nature of loan default risk and calls for a more nuanced approach in federal student loan programs to support both individual financial stability and broader economic health.
Recommended Citation
Phelan, Christine, "Testing the Feasibility of a Risk-Based Model for Student Loans" (2018). Gabelli School of Business Honors Thesis Collection. 111.
https://research.library.fordham.edu/gabelli_thesis/111
