I think that the answer is to allow individuals to discharge student loan debt during bankruptcy just like any other kind of debt. The real problem here is the student who takes out 50K or 100K in student loans and has pretty much zero hope of ever paying it back. Apparently, a limited number of people are able to walk away from student loan debt in bankruptcy if the judge finds repayment as an undue hardship. However, this is a complicated procedure.
If student loan debt were treated like credit card debt, the banks would be more careful in awarding student loans. The bank might actually say no to the $100K psychology degree. Or maybe the banks would call students who were building up debt to ask them what is going on like the credit card companies do if I make a big charge just off the plane during a vacation. The downsized amount of loan awards would take some of the bloat out of colleges that create crazy programs. There would be fewer students with less-competitive degrees, which would make the job market better for those with those degrees. Students with crazy debt would get the debt discharged during bankruptcy and eat ramen noodles for seven years and then start living again.
If student loan debt were treated like credit card debt, the banks would be more careful in awarding student loans. The bank might actually say no to the $100K psychology degree. Or maybe the banks would call students who were building up debt to ask them what is going on like the credit card companies do if I make a big charge just off the plane during a vacation. The downsized amount of loan awards would take some of the bloat out of colleges that create crazy programs. There would be fewer students with less-competitive degrees, which would make the job market better for those with those degrees. Students with crazy debt would get the debt discharged during bankruptcy and eat ramen noodles for seven years and then start living again.
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