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That would cause a massive interest rate hike, no?

No, why?

Banks would need to price the risk of failing to get the loans back. Part of that might be refusing loans, but part of that would be raising the price.

Even the most creditworthy student is more risky to loan to when a bankruptcy would cancel the debt. So even they should get a marginally higher interest rate.

If you look at historical rates, the dischargeability of student loans via bankruptcy had NO effect on student loan interest rates.

https://www.savingforcollege.com/article/historical-federal-...

I am nowhere near well versed in US student-loans to learn much about your claim based on that link. I would love some more explanation of how those data support your claim.

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