Your proposal is unworkable because virtually everyone graduates from college with close to zero assets. No matter what someone's ability to repay their loans were, they would have a huge incentive to declare bankruptcy on the day they graduate to discharge the debt.

This is the natural fix. People then don't get the loans they can't afford. There is no limiters in place for a liberal arts major taking out 100k loans.

The future is in income sharing agreements. Let the market and investors decide if they can be paid back.

If college loans could be discharged via bankruptcy it wouldn't just be liberal arts majors with 100k loans who did it, EVERYONE would. Even people graduating and taking high paying jobs who could easily pay back the loans.

Saying that college loans should be dischargeable is basically saying that student loans shouldn't exist (which is a fine point of view, but people should be clear on what their position is).

No, no, no. Before the seventies student loans could be discharged and less than 1% of lawyers and doctors discharged them through bankruptcy. In general these loans were paid back.

Second point. Saying a loan should be dischargeable does not mean the loan shouldn't exist. It is a cost the lender has to assume. And before you point out that this will be inflicted upon the borrower in the form of higher interest, I have my doubts. The bearer of an additional transactional cost depends on mostly on elasticity, but basically there is so much profit in student loans right now the lenders will just make a lot less money, and nothing else will change.

Student loans were much much smaller in the era you refer to (before 1976 when the law was changed). Behavior would be much different today with the much larger debts people take on.

Tuition was much much smaller in that era too.

If the point you are trying to make is:

  1) loans should be dischargeable via bankruptcy so that
  2) lenders refuse to make such large loans so that
  3) tuitions are forced down

Then I think that's a perfectly fine point of view (as I already said above). It's just important to be clear about it and not simply say that loans should be dischargeable with the expectation that everything else will stay more-or-less the same.

Making this change would have an enormous impact on how higher education in the US functions.

Because it wasn't being inflated by billions of dollars of non-dischargable loans.

You can't have a loan at high APR and then not have it be dischargeable. It's either a special type, but at low interest, or alternatively, high interest but normal.

I like the way this girl did it. Great deal and she was smart about it.

The problem is the same as companies. Admins won't get slashed, but educators will. Then in many months to years later they wonder why they are on a sinking ship and fire more workers.

So let those institutions fail, or come precariously close. The hole is dug. Getting out will not be fun but we at least need to put down the shovel.

We could even cancel a trillion dollar fighter jet or two.