Death by student loan debt

In a recent Twitter discussion I found myself explaining to a fellow that banks, lenders and schools take no risk when lending extraordinary amounts of money to students with no hope of repayment.  The other fellow was of the mind that no debt should be dischargeable.  That seemed harsh.  The Constitution makes provision for bankruptcy.  Why? Because even in the late 1700s Americans believed in second chances.

A student loan debt is almost never dischargeable under current bankruptcy statutes.  A public company that makes a product that kills people can escape liability for ruined lives and families.  A financial firm can lose billions in pension funds stripping security and dignity from desperate retires, and it can escape liability.  An 18 19 20 year old kid decides art history is the degree he needs, his parents think (wrongly) that a college degree is a guarantee, and all of a sudden, the financial aid office is helping the kid obligate himself to borrow and pay 30k in tuition - per year.  Four years later, with living expenses, books and transportation, the debt is 200k.  He can't escape. He will be hounded  for life.  There are social security recipients suffering student loan garnishment.  No joke.

The likelihood of paying that amount back while trying to live, have a family and just pay bills is minimal.  If a lender were not guaranteed to be repaid by the government, then it would not lend freely to a person who was going to buy a degree that had limited return potential.

If lenders were more reluctant to lend, because they had to actually manage a risk of non-payment, then schools would have to lower their program prices to the point that their cost matched their value.  When there is no risk of loss to the school or the bank, then the sinister incentives to urge debt on students looms large.

There is no moral obligation to provide a college education to every person.  It's okay if some kids don't get to go to college.  They will be okay.  Better for sure if they don't start life as debt slaves.