I think you are missing that the many (most?) student loans in the US are either made by the government (post-2010 direct loans) or are guaranteed by the govern

I think you are missing that the many (most?) student loans in the US are either made by the government (post-2010 direct loans) or are guaranteed by the government (pre-2010 guaranteed loans): http://www.nolo.com/legal-encyclopedia/types-federal-student-loans.html http://www.nolo.com/legal-encyclopedia/types-federal-student... If the student defaults on a direct loan, the government is the one not being paid. If the student defaults on a guaranteed loan, the government pays the loan holder. Everyone wins! Except the for the credit blemished student and the US taxpayer, that is.