As lenders wouldn schools have an incentive to drive up the student borrowing?
In the 2005 Deficit Reduction Act the Higher Education Act was amended, requiring all school lenders to return 100% of the profits it made to need based scholarships or grants for students. According to the 2005 GAO report, schools cited the main reason for becoming lenders was to use the revenue earned from the program to “lower student borrowing costs or provide need based aid.
