The government taking over the student loan program replaced businesses that were lending money to students and collecting from the government if they failed to

The government taking over the student loan program replaced businesses that were lending money to students and collecting from the government if they failed to pay. In order to mitigate this while continuing to pretend that the private sector was at work, we then passed laws to aggressively collect on student loans, making default impossible, and substantially weakened bankruptcy besides. Which is stupid. If the government is going to subsidize something like this by "issuing loans" or "guaranteeing loans", doing the paperwork themselves rather than pushing it off to for-profit private entities makes all the sense in the world. There is no substantial problem here for the market to solve; Entities that participate are simple rent-taking parasites on the process of government subsidies reaching students, doing no work themselves other than advertising. Tuition growth is a separate and very real issue. Bankruptcy is a closely related issue, which has quite a bit more bearing on the article. We have a word for cultures that do not practice bankruptcy and pass on unpayable debts: slave states. Bankruptcy - the positive ability to escape from debt and in doing so to be blacklisted from further debtors - is essential both to keeping people free from indenture and also to keeping lenders honest in their assessment and labelling of debts. College debts are particularly difficult to assess risk on: A free market does not seem like it would fund as many educations as the government would prefer people to get educated, which is where this started. That's why I think the government should favor grants over extreme long-term debts. Factor in the cost today instead of pretending we'll have the money tomorrow, and you head off a lot of pain for both lenders and debtors. The government can already redress its losses through taxation. A credit rating that shows default to the government is a deterrent just as much as a credit rating that shows default to a bank. Some fraction of people will always be irresponsible, unrealistic, or just unlucky in acquiring debts they can't handle. Heaping blame on them and examining their individual faults is a distraction from attempts to actually deal with the fact that some fraction of people will always fall into that category. Our language on topics like this has some of the most baggage of anything we talk about. It's important to examine all the words you're using, and try to remember to ask "Is this a useful paradigm to apply". Because the National Debt is not Household Debt or Municipal Debt. Household Debt is not loaning your neighbor 50 bucks for beer. Loaning your neighbor 50 bucks is not a bail bond. Every situation is unique and trying to imbue them all with the same morality and judge your way out of the problems they develop is worse than useless.