But if student loans existed in a competitive market, there would exist huge incentive for loan providers to do everything they could to really figure these thi

But if student loans existed in a competitive market, there would exist huge incentive for loan providers to do everything they could to really figure these things out. I completely take your point that this feedback would never be exact, but with federal student loans, the current feedback is about as worse as it could be. In a true market system, loan providers -- who would care a lot about being paid back! -- would require higher rates for schools with more dubious success, and would therefore tighten the feedback loop between school quality and student enrollment.