[Sangama34]

Not always.

If students are allowed to declare bankruptcy from student loans than banks can apply a more realistic risk models to such lines of credit. Students will then have to either pay very high rate of interest or will have to go out their way to prove their financial responsibility. Banks will then be able to create sophisticated models to figure out which young people are responsible enough and who are not. This will incentivize responsible behavior from students as well as institutes and not to mention a competition to reduce fees.

Not to mention, this model will also ensure the folks who should not be in college or will not benefit from it will not be able to go to college. I think this is where politicians disagreed and came with the completely wrong policies with perfectly predictable bad outcomes.