Some Americans caught in the weak job market are lining up for federal student aid in order to take out low-cost loans, sometimes with little intention of getting a degree.
Borrowing thousands in low-rate student loans—which cover tuition, textbooks and a vague category known as living expenses, a figure determined by each individual school—can be easier than getting a bank loan. The government performs no credit checks for most student loans.
College officials and federal watchdogs cannot say exactly how much of the nation's $1.1 trillion in student-loan debt has gone to living expenses, but data and government reports indicate the phenomenon is real. The Education Department's inspector general warned last month that the rise of online education has led more students to borrow excessively for personal expenses.