The massive federal student loan program is creating a gargantuan higher education bubble and unsustainable levels of student loan debt, but at least all that borrowed money is going primarily to educate people, right? Apparently not. Yahoo Finance reports on yet another way that the nanny state is creating moral hazard and impoverishing the culture:

A number of factors are behind the growth in student debt. The soft jobs recovery and the emphasis on education have driven people to attain more schooling. But 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—also can be easier than getting a bank loan. The government performs no credit checks for most student loans.

College officials and federal watchdogs can’t say exactly how much of the U.S.’s swelling $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. Its report said that among online programs at eight universities and colleges, non-education expenses such as rent, transportation and “miscellaneous” items made up more than half the costs covered by student aid.

The report also found the schools disbursed an average of $5,285 in loans each to more than 42,000 students who didn’t log any credits at the time.

…. Even when schools suspect students are over-borrowing, they are restricted by federal law and Education Department policy from denying funds.

College and university trade groups are pushing legislation this year to set lower maximum loan limits for some types of students, such as part-timers….

Mr. Selent, of Fort Lauderdale, knows he is getting himself deeper in a hole but prefers that to the alternative of making minimum wage. In his 20s, he earned a bachelor’s degree munications from a local for-profit school but couldn’t find a job in the field after graduating and began falling behind on his student-loan bills. He is now taking courses for a degree in theater so he can e an actor.