Why shouldn't student lenders be able to decide who to lend to?
This is wrong in a bunch of ways. As Pat Watkins, director of financial aid at Eckerd College, told the New York Times, "Banks are not philanthropic agencies" and that if banks are required to make unprofitable loans, "a lot of the banks will just say, we're out of the business completely, you pushed us out."
That won't do a lot to help the "student lending crisis" that is making national headlines. In the long run, strong arming private companies into making loans they don't want to make won't do a lot to help anyone, and is likely to hurt the people it is designed to help: students.
But, as I recently wrote, a decline in the availability of loans for community colleges might actually be good for some students, as they'll pay for college in better ways: working more and being frugal. But in the meantime, lenders should be allowed to make the loans that make sense, and shouldn't be forced to make bad loans or no loans at all.