Remember, the "moral hazard" spoken of in financial bailouts is that the lenders aren't being punished for taking bad risks.
I have to agree that somehow the risk and the student's motivation and achievement are inversely related though there was never any inquiry into my records in the process outside of verifying that my university was on the up-and-up.
But beneath this is a more fundamental question. Why can't we as a country afford the things that are important (our health, our education and our homes) when we make so much more than the developing world where they have the same basic needs? What have we actually gained (aside from creature comforts) from our high incomes as it relates to living our lives. We're borrowing money to pay for almost everything and then paying the interest the rest of our lives.
People who were taking advantage of those loans generally fell into a few categories. Investors who were buying real estate to flip. People who were getting houses appraised at more than they were worth and were illegally getting cash out and people with money that were buying over priced houses to live in but to sell later.