[timssopomo]

We do, actually, at least in the US. It's called bankruptcy. We generally recognize that sometimes despite best intentions, debts become unpayable and in these cases, the debts get restructured and creditors are frequently wiped out (which is fair, since both borrower and lender take risks).

Student loans can't be discharged through bankruptcy unless the borrower is permanently disabled. It's entirely possible to end up in default on a loan for a degree you never obtained, paying a loan your entire life, without ever decreasing the principal. Unsurprisingly, this rubs people the wrong way.

[LadyCailin]

It should be on the university and college, if you must have private higher education, and not just make it free. State that the institution and/or potential employers must give out a loan that will cover the entire cost of education, which can be paid back with x% of income for 120 months of full time employment. If the student cannot find a job, or is not desirable for a given industry with the degree, and has to take a waiter job, they still owe x% of their wages, but the absolute value of that will be much lower.

Now, the university will stop offering loans for worthless degrees, and they will only give you a loan for things they think you can actually succeed in, ensuring that there is huge incentive for everyone to ensure the student succeeds if they end up needing a loan.

Private cash payments can still be made to take whatever underwater basket weaving major you like, but you can’t go into debt for a degree that will bind you for the rest of your life.

[everforward]

I think it would need to be more nuanced than that if we want to escape second order effects.

The first is that if the college bears risks for financed students, the first seats will always go to people who can afford to not use financing. It'd be like the legacy system, but out in the open and encouraged by regulation.

The second is that it will likely make it harder to climb the social ladder. I'm too sleep-deprived today to find sources, but I would imagine that students that can afford to not work while in school tend to do better. Likewise, I would bet that wealthier students tend to do better by nature of connections. If your dad/mom is an engineer, and you want to be an engineer, you've already got connections.

It also pushes people towards the military, if the GI Bill is the only way for normal people from poor families to afford college. It's a little dark that wealthy families can pay their children's way, but poor families have to risk them dying to do the same thing.

I like the basis of the idea, I just think it needs a bit more nuance to prevent wealth inequality getting worse than it already is.

[LadyCailin]

Yeah, these are all good points, and I agree. But the bottom line is that currently no one profiting from the situation has any skin in the game, so when they start doing more harm than good, they have no natural alignments that would make them self correct.

[rootusrootus]

> It's called bankruptcy.

Then why is the discussion around a debt jubilee rather than reforming the bankruptcy rules for student loans?

[timssopomo]

I'm pretty sure the folks who are for a debt jubilee are also for reforming bankruptcy rules, and there are folks who are in favor of reforming bankruptcy rules that aren't for a complete jubilee.

I was pointing out that we already have a legal and moral framework for discharging debts that can't be repaid.