> If you knew it was impossible for someone to declare bankruptcy, why wouldn't you loan as much as possible to them? This is exactly how we got into a student

> If you knew it was impossible for someone to declare bankruptcy, why wouldn't you loan as much as possible to them? This is exactly how we got into a student loan crisis. If debtors could declare bankruptcy, then lenders would be much more judicious with their money. But as it stands, there's no real risk to giving an 18 year old hundreds of thousands of dollars in loans because it's practically a guarantee of 7% interest payments for 20+ years. so first of all, the reason there's no risk in student loans is because the servicer doesn't actually lend their own money; they just manage the loan for the government. second, bankruptcy isn't the only risk you take when you make a loan. there's always a chance that the person simply won't make enough money in their natural life to pay back the principle. $100k, you will probably get back in interest over many years. but if you loan $1mm, you might never recover the principal.