[JonFish85]

Maybe, maybe not. If you restrict it too far, loans won't be made to people who need it. What bank wants to lend $100k to a student who is going to graduate, declare bankruptcy, then get a $150k/year job with no liabilities? Obviously it's a contrived example, but the real trick of all this is lending money to someone with no assets. Somehow you have to pay for those who can't pay on their own: either interest rates go up, number of loans goes down--neither of which is particularly good outcomes.

[pitt1980]

bankruptcy isn't exactly a get out of jail free card

I'm not an expert in this area, but I suspect if you're interested in qualifying for a mortgage in the future, bankruptcy is something you should think twice about

I'm not opposed to student debt having somewhat different standing from other types of debt in bankruptcy proceedings

but I think playing with the mechanics of what moving around the standing of student debt in bankruptcy proceedings would do, is probably a fruitful avenue to explore as a society

----------------

I'm not sure making it harder to take out 150-200K in student debt might not be a step in the right direction, even if that's politically hard

[nradov]

A bankruptcy can only remain on a consumer's credit report for 10 years. And even within that period, if the consumer pays other debts on time then after a few years a bankruptcy will have only a minor impact on credit score. So for someone who graduates from college at age 22 with $150K in student debt it would be economically rational to immediately file bankruptcy and discharge the debt. At worst he would have to wait until age 32 to qualify for a mortgage, and probably not even that long. The government shouldn't encourage this. We need to find ways to prevent students from needing to borrow so much in first place.

[msandford]

> Somehow you have to pay for those who can't pay on their own: either interest rates go up, number of loans goes down--neither of which is particularly good outcomes.

This presumes that college prices exist in a vacuum and that if less money is available colleges won't lower prices. I mean, in the short run the market isn't very flexible, but in the long run it is.

Pretending that college education won't respond to market forces is just as foolish as pretending that anything else won't.

[oneloop]

You're using an "at equilibrium" argument.

The things you described might take 10-20+ years. Between lenders tightening up and college prices coming down, you have a generation of poor people that can't go to college.

[philovivero]

> The things you described might take 10-20+ years. Between lenders tightening up and college prices coming down, you have a generation of poor people that can't go to college.

And so...?

Not being flippant. But if an entire generation of poor kids doesn't go to college, doesn't that mean employers have to figure out other ways to measure probability of success?

What if that generation takes online self-directed courses? What if that generation turns out to be way more self-starting and independent? What if that turns out to be the greatest thing to happen since the early 1900's when "make factory workers" became our educational mantra?

Honestly, I could see this being a great thing.

[corin_]

> Not being flippant. But if an entire generation of poor kids doesn't go to college, doesn't that mean employers have to figure out other ways to measure probability of success?

To an extent yes, but in many situations the easier solution will be to not consider the poor kids and just hire the kids who could afford to go to university. I.e. how it was in years gone by, and not a desirable outcome - but maybe it would be different now in the tech age we live in.

[ikeboy]

Less loans means less people go to college and the price drops. If you think college is overrated and expensive, that might be a good thing.

[jhspaybar]

I think both of the outcomes you suggest, rates up and number of loans down is likely. This would pretty much have a direct impact on the cost of tuition as well it seems, which you seem to have left out of the list.

[lisivka]

Bank can delay payments for few years to avoid that scenario: no payments -> no bankruptcy.