[Jagat]

Honest question. Why doesn't the lender require the borrower to explain how they plan to repay?

Or why do they continue to lend large amounts for degrees where there's a low probability of getting a good salary after graduation.

Or does the govt assume the risk of student loan defaults?

[jniedrauer]

Student loan debt can't be discharged by bankruptcy. Lending in this situation is decently low risk. You're basically rent seeking with humans instead of land. Once you've got one, you can siphon off their excess productivity for decades. You'll get your money back in the long run.

[dragonwriter]

> Student loan debt can't be discharged by bankruptcy.

Yes it can, though it is more difficult to do so than it is for other unsecured debt.

[mikestew]

Why doesn't the lender require the borrower to explain how they plan to repay?

No lender ever asks that. Lenders ask themselves, "how will I be repayed? And in the case of default?" In most cases, the answers are "by the borrower" and "take the house or car, the sale of which will offset some of the loss".

In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash". There is zero incentive to determine how the borrower will repay.

[dragonwriter]

> In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash".

No, it's not. While private student loans are still offered (sometimes, by predatory scammy for-profit schools themselves), none of them for quite a few years have been government guaranteed.

The former government guaranteed loan program has for some time had exactly one lender by law, the federal government itself.

[Gibbon1]

> No lender ever asks that.

I just bought a house and you're utterly wrong.