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[quote=Anonymous][quote=Anonymous]-Newly-issued private student loans should be dischargeable in bankruptcy.. otherwise banks will keep on lending to ANYONE, without analyzing ability to pay.  Didn't turn out well for housing market.

-Young, starry-eyed students shouldn't be put in a position of getting themselves $100,000 - 200,000-300,000 in debt for degrees that can't possibly land them a job that will pay those bills.. especially when NO bank would grant them that credit to buy a house or for any other reason.  They inevitably regret it, would spend decades unable to buy a home or have children, and then become Occupy protestors.  This seems like predatory lending, worse than a payday loan.

-The taxpayer should not be on the hook for federal loans that are unlikely to be repaid.  [/quote]

Tell me how a bank is supposed to analyze a college freshman's ability to pay?  Typically this person has had, at most, two or three years of work experience, typically in low-paying jobs.  During school the person likely is unemployed or employed in a low-paying, low-hours job.  The person likely has no credit history except to the extent he or she has been supported by his or her parents.  Under those circumstances, only those with family money are likely to get loans.

But even assuming that they give some loans based on the prospect that the person will have gainful future employment, what's to stop any grad from declaring bankruptcy the day after graduation?  At the time, the person is quite likely unemployed, has few or no real assets, and has far more debt than he or she can repay.  Even if the honest and ethical student wouldn't do this, there are a lot of people who would.

The current policy works pretty well:  We want people to go to college; most people can't afford it without loans, so we spend some money encouraging banks to lend to what would otherwise be very risky prospects.  To make up for the risk, we make sure the student will pay by making the loan non-dischargeable, and guarantee the loans.[/quote]

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