I would suggest the federal government get out of educational loans entirely. Let the private loan market evaluate and take the risks, probably with an income based repayment contract that favored degrees/programs that are likely to lead to reasonable incomes.

This article says 90% of student loans are from the gov't, so it appears it currently does exactly what you're suggesting. https://www.nationalreview.com/2017/02/student-loans-governm...

I'd rather have non of my tax dollars allocated that way, but if I don't have a choice then there should be some attempt to invest in people and skills that produce self-sufficient citizens.

Despite the fact that be more likely to help than hurt my family, I think it’s undesirable societal policy.

Or we could just socialize college and abolish the distinction between "elite" and "not elite".

Lenders have no reason not to give out these loans as they will be repaid even if it is sub-prime.

Schools have no reason not to jack up rates because students are given largely unlimited access to loans.

Both parties have been repeating this and raising their incomes for decades ever since student loans have become non-dischargeable.

Instead of ranking loans based on repayability, lenders have divorced themselves from financial reality because government intervention.

People have been saying this for many, many years! And using as an example of the Law of Unintended Consequences.

To keep interest rates on student loans low and to make sure the loans are available to 18 year olds with no credit history.

There was a real problem with medical students racking up huge sums, declaring bankruptcy when they were making low money during residency, but then making 6 figure salaries a few years later.

>It seems like student loans should be treated like any other unsecured loan.

Nobody loans 18-22 tens of thousands (and 22-26 years olds hundreds of thousands of dollars) in unsecured loans.

And look at the interest rates for other unsecured loans. My credit card rate is 19%. Earnest gave me LIBOR + 3% on 200,000 dollars of student loans.

My loan rates are 6.55%. After 10 years of continuous school, that really, really adds up. I even had scholarships but they wouldn't cover my dorm, the mandatory meal plan, or summer classes so that I could finish undergrad faster. I looked to refinance with 3-4 different companies, like SoFi, but the lowest they offered was around 7% despite my very good credit score.

and without an income

Not addressed to you, personally.

Lots of options here.

It was in 1976, not very recent.

The person to whom you are replying is referring to the poorly-named Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. That law expanded the exemption from discharge in bankruptcy of student loans to be any student loan, including privately-issued student loans, not just ones issued by the government through a federal or state program.

This is why you see companies like SoFi running around offering screamingly low rates on student loans. Because they are private, those companies need not offer any of the protections a government loan offers (income-based repayment, forbearance options in the event of loss of income or disability, and so on) but retain the power to garnish tax refunds and the loans cannot be discharged in bankruptcy.

Edit: forgot to say non-dischargable goes back way before that switch. I have personal experience around 2001, but I'm pretty sure it goes back to the 80's.

Set aside the education component entirely. It costs money to be housed, fed, entertained, and consume other things. That’s getting paid for somehow and that somehow is often borrowing for undergrads.

I believe it was something along the lines of people borrowing for law degrees then discharging the debt right after graduation with the knowledge gained from their new degree. I'm sure it was done in other degrees as well.