Adverse Selection and Moral Hazard in National Student Loan

Pooling equilibrium,adverse selection and moral hazard have largely existed during the application of national student loan.The paper analyses the causes of the forgoing problems based on information economics.Information asymmetry between authorities and applicants is the primary cause of adverse selection,and the imperfections in special-purpose funds for risks compensating aggravate adverse selection.High risks,high costs and low liquidity of national student loan leads to moral hazard.Lastly,the paper puts forward countermeasures for these problems.