[iguy]

The problem IMHO is that the "discomfort of declaring bankruptcy" is hard to predict. Right now it caries some social stigma I believe, but that could change. I don't think that's a great mechanism for deciding who pays back the loan and who doesn't... and my suggestion in all such threads is that this should be tied to future income, which the lender will then become very interested in predicting.

[TrinaryWorksToo]

Does declaring bankruptcy increase interest rates for the debtor? That could be enough incentive for it to be discomfortable

[iguy]

That's a point. I bet it does right now.

But if it became commonly done after graduating, then I imagine it would not predict much about whether you will pay the mortgage on your house (which is anyway secured by the house) and so lenders would soon not care.