This would be a mistake I think. The nature of a loan is that the lender can reclaim the asset when a default occurs. This works well for assets like cars and

This would be a mistake I think. The nature of a loan is that the lender can reclaim the asset when a default occurs. This works well for assets like cars and houses but obviously fails for knowledge. Combine that with the age and overall assets of graduates (22 and near-zero) and a bankruptcy becomes a less risky proposition to the student. As more and more default on the loans, interest rates will start to skyrocket, to the point that no one will be able to afford one at all.