[seanmcq]

Why wouldn't universities just rase rates 10% to cover their projected liability?

This would obviously only exacerbate the problem and hasten the fall, but that does appear to be how independent actors work.

[bjornsing]

Exactly my thought. This is a huge difference compared to mortgages; with mortgages the originator gets perhaps 2%(?) of a good loan but with student loans the "originator" gets a very large share.

The skin in the game effective tells a mortgage originator that if one loan in five goes bad they lose all their revenue(!) but the same message to universities would be that if one loan in five goes bad they have to raise their prices by 2% to compensate.