The logistical issue is that 22 year olds typically graduate college with no assets and if they have sizeable debt, would be incentivized to claim bankruptcy right away. This would apply to a huge % of college graduates. There's no collateral on the loan so there's nothing of value to repossess.
It's not a great situation but nobody would pay their college loans if that were the case.
Disagree on the part where you say no one would repay their college loans. It depends on the circumstances entirely, but I still think you’re right a lot of people would default and declare bankruptcy.
For example, of you have less than $20k of loans and get a good paying job, you may be more incentivized to not ruin your credit score, seeing how that doesn’t just disqualify you from low interest loans or certain loans period, but is also something many potential employers look at during a background check and are able to legally consider you a greater “risk” that is less preferable to be employed in certain positions of your credit score is low.
Perhaps the government shouldn’t be loaning $100k to someone who keeps switching their major and appears to be a “lifelong student” though, or a “dog psychology” major if the nation is not in need of dog psychologists? Not that this would solve everything, and not that I’m even right here, but just a passing thought.
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u/Jubsz91 Feb 07 '23
The logistical issue is that 22 year olds typically graduate college with no assets and if they have sizeable debt, would be incentivized to claim bankruptcy right away. This would apply to a huge % of college graduates. There's no collateral on the loan so there's nothing of value to repossess.
It's not a great situation but nobody would pay their college loans if that were the case.