Re:Judge rules that student loan debt is dischargeable in ba...
by bradleyjg on Sunday January 12, 2020 @07:07PM
(#22030718)
> I think the original intent was to incentivize more lending, and thus more access to higher education, by giving lenders more protection.
I think that's correct, however meanwhile the system dramatically changed and now the vast majority of student loans are made by the government without any underwriting.
The largest private sector role is poaching the best risks to refinance. Allowing these refinanced loans to continue to be non-discharable has the net effect of enabling the private sector to more effectively engage in adverse selection against the government-as-lender! It's hard to imagine anyone would actually sit down and design this policy set.
I think that's correct, however meanwhile the system dramatically changed and now the vast majority of student loans are made by the government without any underwriting.
The largest private sector role is poaching the best risks to refinance. Allowing these refinanced loans to continue to be non-discharable has the net effect of enabling the private sector to more effectively engage in adverse selection against the government-as-lender! It's hard to imagine anyone would actually sit down and design this policy set.