As I discuss in my article for the JAH, the Lyndon B. Johnson administration proposed the Guaranteed Student Loan Program as the first universal, federal program of student loans within the Higher Education Act of 1965, which was part of its attempts to expand access to higher education. The administration partnered with the American Bankers Association (the country’s largest trade association of banks) and a private student loan guaranty agency, United Student Aid Funds, to administer the program from 1966 onwards. These partnerships helped shape the 1972 amendments to the Higher Education Act, which established the Student Loan Marketing Association (Sallie Mae) as a source of liquidity for the federal student loan program. Sallie Mae would provide the institutional means of commodifying student loan debt over the coming decades. The partnerships also led to amendments to the U.S. bankruptcy code that limited access to bankruptcy for student loans—helping insure the profitability of Sallie Mae. The first universal, federal program of student loans thus tethered expanding access to higher education to individualized debt burdens and market incorporation disciplined through an increasingly stringent legal order.
As the Johnson administration escalated the war in Vietnam, it often framed questions of military manpower procurement in relation to higher education and the need to balance “manpower” with “brainpower.” For instance, the administration grappled with which age groups to prioritize for the draft in relation to students’ proximity to college matriculation or graduation, and whether or not to end draft deferrals for those enrolled in graduate school. The administration and members of Congress likewise considered whether to require loyalty oaths for the Guaranteed Student Loan Program and whether those charged with disrupting campus activities should be barred from accessing the federal student loan program. These considerations were ultimately abandoned; notably, the American Bankers Association and United Student Aid Funds argued against such proposals as not being politically expedient. As the Johnson administration slashed funding for its newly established Great Society initiatives to fund the war instead, the Guaranteed Student Loan Program was an instance where a Great Society initiative could succeed through federal-private partnerships that alleviated funding concerns from the administration. Easing demands on the federal budget within the context of the war also helped the Johnson administration justify its plans for Sallie Mae.