When you take Econ 101, one of the first concepts taught is that of “moral hazard.”

Here’s how Investopedia describes “moral hazard.”

“Moral hazard is the risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities, credit capacity, or when one of the parties is incentivized to take risks that a reasonable person wouldn’t take in an unregulated market, because the costs for bad behavior or risky choices, that don’t pan out, are shifted to someone else.”

Hmm. Can you think of an example of a “moral hazard?”

Student loan debt has skyrocketed in the last ten years to $1,500,000,000,000. Delinquency has doubled in just six years. Nearly one fourth of all student debt is three months, or more, in arrears.

In the student loan marketplace, the taxpayer assumes the risk of students, lenders, and educational institutions in different ways. For example, dependent US students pursuing a bachelor’s degree can borrow up to $31,000, regardless of their creditworthiness or the marketability of their major. Since student loan debt is non-dischargeable in bankruptcy, loan principal amounts, for all practical purposes are cast in concrete. Any risk of default falls entirely on the taxpayer.

The various creative repayment plans, e.g. income-based, and forgiveness programs, present an open invitation to “game” the system and leave the taxpayer “holding the bag.”

The college education doesn’t come with a warranty. Your educational institution gets paid whether or not you learn anything, graduate, get a good job, or go broke in the process. If you want to borrow $50,000 to major in Puppeteering, that’s your call.

The typical student approaching the student loan application doesn’t think beyond filling the gap between net cost and available funds. Eighty percent haven’t identified their major, much less a marketable major, a career, or a targeted starting salary.

No one should be surprised our country has a student loan crisis.

The outcomes from this flawed system vary wildly, from insane success to dismal failure:

Cheryl made a big time bet. She borrowed $100,000 to get a shot at a Computer Science degree at Carnegie Mellon. She worked hard, even finished in four years, and was rewarded by graduating, and being hired by a prominent tech firm. Her starting salary matched the average for Carnegie Mellon CS grads–$108,500.

Yes, she winces every month when she has to write that $1100 check for her student loan payment, but she’s expecting generous annual raises and project related bonuses. With a little luck, she thinks she can knock that debt out in five to seven years.

Steve wasn’t as ambitious. He planned to borrow $25,000 to attend The Ohio State University. He probably spent too much time at the Varsity Club, and he had a certain predilection for the freshmen ladies. It ended up taking him five years to graduate with a degree in French Literature. That $25,000 figure swelled to $37,000—the average amount of student loan debt in 2016.

Steve decided to stick around Columbus. He’s working at the Starbucks on North High Street near campus. This is a part time gig at minimum wage. He has signed up for an income-based repayment plan. His strategy is to eventually hand off his debt to the taxpayers.

Maria always wanted to be a high school teacher. She was thinking about getting her teaching degree online at Western Governors University, but her mother encouraged her to have “the college experience.” Maria was nervous about student loan debt, but all of her friends were going away to school.

She and her mother completed the FAFSA and applications to several state universities. Maria was excited to be accepted at the University of Cincinnati. When she received their financial aid award letter, she found she had been given access to the maximum amount of student loans for a dependent freshman–$5500. She and her mother reviewed the letter carefully and determined that with the work-study job and $5000 her grandfather had saved for her schooling, Maria would only need $3500 in student loans for her freshman year. That certainly seemed manageable.

Maria did graduate in four years and get a teaching job. However, the annual costs of college kept creeping up and her outstanding loan balance ballooned to $39,000, including $8000 of private loans cosigned by her grandfather.

After taxes, healthcare, teacher’s union dues, and a $412 student loan payment, Maria’s net monthly income is barely adequate. Unlike Cheryl, there won’t be any generous annual raises or project bonuses. Maria is living with her mother while facing ten years of living frugally.

Going to college these days is a risky business. When you add the “moral hazard” of student loans, it begins to resemble gambling.