Researcher ORCID Identifier
0009-0000-3238-2099
Graduation Year
2026
Date of Submission
4-2026
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Philosophy, Politics, and Economics (PPE)
Reader 1
Sarah Robinson
Reader 2
Cameron Shelton
Terms of Use & License Information
Rights Information
2026 Ian F Akers
Abstract
The United States student loan market is shaped by a variety of market failures–credit constraints, positive externalities, behavioral frictions including myopia, debt aversion, and misperception–that together justify government intervention in the market. Yet the design of federal intervention is just as important as its existence. This thesis details the economic theory underpinning the market for student loans, evaluates three historical federal student loan programs (the Perkins Loan Program, the Federal Family Education Loan Program, and the Federal Direct Loan Program) through the lens of that theory. The thesis then proposes a novel institutional model as a targeted response to the failures that existing programs left unaddressed. Drawing on empirical evidence on the returns to education, the heterogeneity of student outcomes, and the behavior of for profit colleges, the thesis argues that a well-designed student loan intervention must expand credit access, align institutional incentives with borrower outcomes, and direct resources toward high-need occupations and geographies. The Education Development Financial Institution, modeled on Community Development Financial Institutions, is offered as a mechanism for achieving these three goals.
Recommended Citation
Akers, Ian, "The Economics of the U.S. Student Loan Market and the Case for the Education Development Financial Institution" (2026). CMC Senior Theses. 4092.
https://scholarship.claremont.edu/cmc_theses/4092
Included in
Economic Policy Commons, Economic Theory Commons, Education Policy Commons, Other Economics Commons
