That's basic economics of lending. If X% of people default then you have to increase interest rates to cover the people that default. The increased interest rate will dissuade students from taking on degrees with lesser economic prospects.

It's like adding back pressure or load shedding to a distributed system. It is better to drop or delay requests than let the entire system collapse under it's own weight.

> If X% of people default then you have to increase interest rates to cover the people that default.

Your borrowers can always default, even without bankruptcy protections. It's a good policy, I assume, but I'm not sure it's strictly speaking, part of the free market dogma.

They can't default because of government interference. I don't think anyone was talking about protections.

It's the opposite. If people can default, then the bank has to avoid defaulters, staying away from financing expensive studies in dead end careers.

Otherwise the bank needs to get more defaulter, because they are more profitable than people who pay back.

Imagine a student having to provide grades and a course plan to their bank, and a loan officer has to sign off on this. Not unlike buying a house.

I can't imagine a student not having to provide his university name and major. Lend 20k per year to study the history of arts, what could go wrong?

Higher tuition (skyrocketing tuition, actually) should have already done that

Naw, you just get a bigger loan :)

On The Importance Of Efficient Bankruptcy To A Free Market Economy: https://outline.com/8stGYk (from Forbes no less!)

From someone who blogs on Forbes' platform, you mean.

Free doesn't mean devoid of law.

The law can chain you up, or the East India Company can chain you up, and it doesn't make much of a difference.

Free markets are kept free by intelligent and benevolent legal force.