That's not at all true, in general. For instance, credit card debt is an unsecured debt. If you default, there's no "collateral" as such. As more direct compar

That's not at all true, in general. For instance, credit card debt is an unsecured debt. If you default, there's no "collateral" as such. As more direct comparable, consider the Small Business Administration's loan process. These loans are guaranteed by the federal government in essentially the same way as student loans or FA/VHA home loans. If Bob gets an SBA loan to start a restaurant (famously a bad risk...about 30% fail their first year) and it goes belly-up, he can file bankruptcy and eliminate the debt. That will ding his credit rating, but that's all. The government might (or might not) get a few thousand bucks from selling the restaurant equipment (commercial stoves, freezers, and such), but all the money spent on employee salaries, decorating (quite expensive), advertising, taxes, insurance... it's just gone, and the government can go whistle for it. Why is Bob allowed to file bankruptcy, while Steve, who took out a student loan, is not?