The issue is at the end of a normal Bankruptcy proceeding, assets are sold to repay the note. Lets say you go out and buy a rental property for $500k, if you never make a payment the bank can repossess the rental property and sell it to recover their loan. Your asset is gone, you have no way of making any kind of income from it after it has been repossessed.

With student debt its different, if you went to undergrad at MIT then did an MBA at Standford - you are probably looking at north of $100k in debt. If one year after college you defaulted and it was discharged, you would still retain the 'asset' (your education). You could go out the next day and get a nice job at google and continue to earn income from your asset. The bank has no recourse to prevent you from continuing to use the asset they loaned you money for. This is one of the main reasons that you can't discharge student loan debt. No one is going to come take your degree away from you if you don't pay.

This is retarded (pardon my french). Assets are only relevant with respect to security interest held by the lender. Slavery is illegal, and it is not legal to attach security interests to peoples lives. Of course, by making the discharge of debt itself illegal, the lenders have placed their security interests in a default position aking to the states right to tax all future income. Which is a hillarious (although not funny) abdication of government authority in a democracy (as its unaccountable, not to mention opaque and non-transparent).

I'm not advocating this, but why couldn't they take your degree away? They can't take your education away, but the degree is just an agreement/contract that says you upheld your part of the bargain - passed tests, etc, and paid the university, and they in turn give you a certificate of achievement. If you default on the loan which was a substantial portion of the payment clause of that contract, why can't they revoke the degree?

I realize the loan in these cases is not directly from the university.

If they could, what would be the point? They don't want to punish you; they want their money back. It's not like they could sell your degree to someone else.

I suppose just as an incentive to not default. If you keep the degree, in theory you are more employable. If you have to give it up to default on the debt, maybe you'd think twice?

Or you'd just tell your employer you had to give it up in a default. He's not going to care whether or not you still have your official slip of paper.

If you implement it properly, there will be no transcripts or verification if bills are not paid.

I went to Harvard, its just I lost the degree in bankruptcy, so they claim I didn't go. Just call my references (which are actually burner phones held by my brothers)

Interestingly higher ed already requires all bills to be paid to graduate... they don't care if you default on your credit card the week after graduation, but you aren't getting the diploma until the library fees and tuition are paid off by "someone, somehow". Once its the loan servicers problem, they don't care and you get your diploma. I vaguely recall having to get a slip from some different offices proving I owe no money to the school, in order to graduate, and threats they wouldn't provide transcripts to students in collections, etc.

But your future employer may care about indications of your character and future behavior while under their employ. I've heard of companies running credit-history checks to discern whether a prospect is a risk of embezzlement.

I'm not saying the judgement / assumptions would be correct, but it's quite possible some employers would act this way all the same.

Therefore it's a big incentive to pay your money back.

But presumably if the employer cares about defaults it won't matter whether or not you get your degree since the default will show up on your credit record.

The degree is just proof that you have the education. Revoking the degree does not revoke the education which is, short of extenuating circumstances, deserving of certification. When you're hired, you're hired for the education; the degree is just convenient standardized proof you have it.

True, but claiming an education != having proof of it. Sure you're employable, but it's more difficult.

Plus, if the potential employer checks your credit history and sees you defaulted on your student loan, they may make assumptions about your behavior or character, having a definite impact on their hiring decision.

Credit cards also carry interest rates based on that risk. Do you think student loans would work with 25% interest?

yes, and if you were offered a 25% interest rate, perhaps based on a poor choice of major, then the signal would be "don't go to college"; or "switch majors"; or "get better grades"

The original recipient / payee of the majority of college debt is a government college / university. Not always, but the vast majority. So why would the government make laws such that money owed to another government entity cannot be defaulted on?

Call it professional courtesy.

Regardless of the students' situation, that money going to get paid, come hell or high water.