[Happydayz]

You can't discharge a student loan in bankruptcy. This makes sense. If you borrow money to purchase a car or a home the lender always has the option of repossessing the goods as a last resort.

You cannot legally repossess someone's human capital. So the current law is set to avoid the moral hazard of someone borrowing $100k in student loans and then declaring bankruptcy right after graduation.

[analog31]

But it promotes the moral hazard of the bank offering you a loan when they know that the human capital is likely to be worthless.

[dragonwriter]

> You can't discharge a student loan in bankruptcy. This makes sense. If you borrow money to purchase a car or a home the lender always has the option of repossessing the goods as a last resort.

Non-secured debt of other kinds are generally dischargeable in bankruptcy, so that principal isn't generally applied outside of student loans.