You love your 18-year-old. You want to make him happy. So would you hand him the keys to a Ferrari, a bottle of tequila, and tell him to figure out what's next? NO!
But, today, kids who have never paid a bill, or made a budget are signing school loans that add up to $10,000 to $40,000+ for an undergraduate degree for Modern Dance.
If you are thinking of how student loans worked in the old days, you are thinking wrong today.
Before the 1990s, loans were tightly controlled, need-based, capped at about $1,000 annually (roughly $8,000 today), and disbursed as checks made payable directly to the college. Students signed the check at registration, and bought a bus pass to the dorm. Usually students had a work component in their aid packages. Cosigners were rare and vetted in person at financial aid offices, with no online shortcuts.
In 2025, the game has changed.
The system has ballooned into a $1.7 trillion behemoth serving 43 million borrowers, driven by the 1965 Higher Education Act's Guaranteed Student Loans (now Direct Loans).
Disbursement is still school-directed: Funds hit the bursar's office 10 days pre-semester, covering tuition first, with a chunk of money left for 'costs of attendance,' a figure the student decides entirely on his own. Those funds are wired or checked to students within 14 days.
"Cost of Attendance" now includes broad personal expenses like rent and travel, enabling $120,000+ degrees at private institutions. Once students struggled to work and pay for their housing while studying during their young college years. Today, they struggle in their working life with huge student loans, to which they agreed.