We subsidize the shit out of education, and yet it still manages to be such an awful investment people can't pay it off over 30 years with very low interest rates.
Yes. We should invest in public universities to have very low cost or free tuition, and stop pouring public money into private education institutions.
The offered loan amount would be much lower, too.
There would be nothing to distinguish a student loan from any other unsecured personal loan (like a credit card), so the credit line would be similar. For an 18 year-old, that means the total amount over 4 years would certainly be less than $10k at an APR in the 20's to 30's.
Which is fine, because tuition, textbooks, and housing would be, too.
This is a crystal-clear example of what happens when government subsidies distort a market.
Education is not an asset you can take away. Houses and cars can be foreclosed on; you can't take and resell education as a good.
It either needs to be kept as a pure luxury commodity, or it needs to be valued societally and not require an individual to pay for. Even if college is 'cheaper', if it prices some people out, it can't be viewed as a necessity to be able to get a good job (not saying it is, but society certainly tries to push that viewpoint).
Why would anyone lend money to someone with zero credit history, zero income, zero collateral, zero prospects of repaying the loan for at least 4+ years, and has the ability to immediately declare bankruptcy as soon as it comes time to start paying you back? What would the free market interest rate be on that type of loan?
Allowing loans to discharged is nothing but a band-aid on a broken system. We need to work to make college cheaper. Building the entire system around loans is the problem, not one specific feature of those loans.