Unless someone else (like parents) stand as guarantors, I think the greatest predictor for a default will be how competent the candidate is after finishing the education.
Also, instead of allowing a bankruptcy at any time, student loan down payment could be limited to max 25% of income after tax OR 10% of net worth, whichever is greater, with any balance after 30 years transferred to the college.
Objectives:
1) Reduce the incentive for colleges to offer education tracks that they KNOW (or should have known) will never lead to much beyond a minimum pay job.
2) Prevent unlucky or unsuccessful students to get stuck with an impossibly large loan that just keeps growing, absorbing all they earn or own.
3) Ensure that students still do feel some pain when this happens, but not so much that they lose all incentive to build themselves up. They still keep 75% of their income after tax AND they're guaranteed that the loan will end within 30 years.
4) Incentivize pricing of of the student loans in ways that reflect the risks involved. If students that study "lesbian dance theory" have to pay a 10% interest rate while Physics students pay only 5%, that's a pretty strong indication that the "credit score" for the former is pretty bad.
5) Also incentivize minimizing cost while maximize the useful learning for the college, to minimize the risk that they'll be stuck with too much of the debt.
If this leads to some (presumed worthy) students having fewer opportunities than they otherwise would have, it's still possible for the collages, government or others to provide stipends or other similar forms of support.
Also, instead of allowing a bankruptcy at any time, student loan down payment could be limited to max 25% of income after tax OR 10% of net worth, whichever is greater, with any balance after 30 years transferred to the college.
Objectives: 1) Reduce the incentive for colleges to offer education tracks that they KNOW (or should have known) will never lead to much beyond a minimum pay job. 2) Prevent unlucky or unsuccessful students to get stuck with an impossibly large loan that just keeps growing, absorbing all they earn or own. 3) Ensure that students still do feel some pain when this happens, but not so much that they lose all incentive to build themselves up. They still keep 75% of their income after tax AND they're guaranteed that the loan will end within 30 years. 4) Incentivize pricing of of the student loans in ways that reflect the risks involved. If students that study "lesbian dance theory" have to pay a 10% interest rate while Physics students pay only 5%, that's a pretty strong indication that the "credit score" for the former is pretty bad. 5) Also incentivize minimizing cost while maximize the useful learning for the college, to minimize the risk that they'll be stuck with too much of the debt.
If this leads to some (presumed worthy) students having fewer opportunities than they otherwise would have, it's still possible for the collages, government or others to provide stipends or other similar forms of support.