or just eliminate the nondischargability clause for private student loans, which then means the spigot will close and the sensible maximums built into federal loans will put back pressure on soaring tuitions...
Loaning to people with nothing to lose is going to look like 15% interest rates.
as long as those loans are plentiful and uncapped, the upper bound on tuition remains so as well.
Also wouldn’t this make it very hard for the poor to ever get student loans?
Colleges will have to adapt though, because there are not that many rich people to sustain such high prices.
Why not do that now as soon as you get any type of loan?
You don't just "declare bankruptcy". And bankruptcy law can be changed as desired to prevent that. There's nothing special about student loan debt versus other types of debt.
In any event, requiring repayment based on income (like 7% of income up to a certain monthly amount) is almost certainly a better policy. The students and lenders both have the right incentives with those schemes.
> Why not do that now as soon as you get any type of loan?
With other assets your bank can repossess something - but there’s no real way to repossess an education.
Some complain that this will make universities effectively become vocational schools and cut liberal arts and humanities programs. But I see that as a feature: putting more emphasis on education on the fields with higher labor demands.
that said, it also makes it harder for individuals to make big bets on themselves until the market corrects (assuming it even would)