Many Americans are still recovering from the 2008 financial crisis. Almost everyone knows someone who lost a job, their retirement savings or even a home in its aftermath. While the effects of the Great Recession were felt throughout the economy, its main cause can be traced back to subprime lending in the mortgage industry.

In the early to mid-2000s, lenders introduced risky products such as zero-down home loans and payment-option adjustable-rate mortgages, which enabled borrowers to take on more debt than they could afford. Lax lending practices led to increased demand and skyrocketing home prices.

When the housing bubble burst and sent home prices plummeting, it set off a chain of defaults that snowballed into a recession. This cautionary tale of risky lending, ballooning debt and market speculation should be a clear warning of looming perils in the student loan industry.

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Higher education is increasingly considered a necessity, and today's young people are often encouraged to borrow to cover the costs. With approximately $1.4 trillion of outstanding debt, student loans are now the second-largest category of household debt in the U.S., trailing only home loans. Many of these loans are guaranteed by the federal government, the largest student lender in the U.S., so all American taxpayers have a stake in this issue.

As tuition and fees continue to increase at both public and private institutions, students' debt loads are rising along with them. Over the past 20 years, college costs have grown at over three times the rate of inflation. The result: 70% of college graduates have student debt, with the average borrower owing more than $37,000 at graduation.