[vilmosi]

I think you're slightly missing the point.

If student loans can be defaulted, it doesn't matter what the investor thinks or what interest you get or if you're backed up by the government or not.

Even if you study [insert profitable degree], the rational action to do after graduating is to default, since students typically don't have much to lose.

[phkahler]

And then lenders won't make the loans. That's exactly the point. Student loans were a bad idea in the first place. The ready availability of tuition money has lead to schools raising tuition FAR faster than inflation for the last 20-30 years. Most of that money isn't even going to education.

[mrep]

Except without those loans, poor people will have to grind out low paying jobs trying to save up enough money to go to college and get a higher paying job that requires a degree because they have no money to pay for it. Then, when they finally get through college, they will be years behind the kids of wealthy people and to make matters worse, every year you delay putting off a degree decreases the future value of said degree since you generally have a limited amount of working years and thus less years to earn money from said degree.

[ransom1538]

Exactly. It is a poor investment option. So less investments are made, so less students attend, tuition plummets, community colleges spring back to life, people focus on degrees that offer pay, kids exit with no unforgivable debt, on and on.

That is bad?

[fnrslvr]

It seems to lead to the sort of situation where the only kind of success a poor kid can hope for in life is the kind where they get into the kinds of degrees that offer pay, whereas privileged rich kids have the luxury of getting to go into "useless" humanities degrees and curate our culture and history and whatnot. Only enabling the leisurely well-to-do to enter the latter kind of career path is generally considered a bad thing.

[vilmosi]

It's not bad. But it doesn't matter how much tuition costs or what degrees offer pay or not. Everyone will study whatever they want, borrow at 1000% interest if necessary or 1% interest for "profitable" degrees, and then dump the dept as soon as they graduate.

Or am I missing something? Original question, what's stopping everyone from defaulting right after graduation?