Preach, Elizabeth Warren. Student loans are a huge stressor for a whole lot of people these days. How many people? Back in 2010, 1 in 5 households carried some form of student debt, according to a Pew Research study. Two years later, Pew found that 69% of college graduates had taken out loans to finance their education.
Of course, it wasn’t always this way. Student loans have only been a thing in America since the Space Race, when Eisenhower established the National Defense Education Act of 1958 as a means of financing and thereby improving science and technical education in the U.S. Back then, loans were low-interest and came directly from the government.
It only took seven years to change that. With Lyndon Johnson’s Higher Education Act, the way the federal loan program was financed changed: instead of the dollars coming directly from the treasury, loans were made by banks. The government guaranteed to repay loans that students defaulted on, which meant it was a win-win situation for both parties—banks didn’t have to worry about bad loans, and the government didn’t have to mark the outstanding loans as debt on their books.
Enter Nixon, and the birth of Sallie Mae. Are you ready for your Whoa Fact of the day? Sallie Mae is actually the nickname for the Student Loan Marketing Association, or SLM. People, they’ve given a corporation a female name to humanize it. (And as a complete aside, if you’re wondering if Freddie Mac is the same way, it is. It stands for the Federal Home Loan Mortgage Corporation, or FHLMC. Wut.)