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The non-dischargeability of student loans has been an aspect of bankruptcy law for a long time. It substantailly pre-dates the 2005 amendments to the Bankruptcy Code that made Chapter 7 more difficult to qualify for.
A student loan is un-collateralized. Therefore, since the future income of the student is to provide repayment the loan is risky by definition. The interest rates reflect that risk.
So far, the posters have suggested that (1) the schools expend their endowment funds to allow students to attend and (2) let the government "fix" the problem.
Nobody seems to dispute that the government "fix" is nothing more than spending tax dollars to subsidize college for only a portion of the citizens.
The use of endowments assumes that the private college sufficiently values a particular student with substantial need. So long as the demand for the slots at that school from those who can pay is sufficiently high, they are not going to do that as a matter of course although they may for the "exceptional" student. And, guess what? They already do this.
It seems clear that what we are really debating is what to do with those that are needy, but not sufficiently exceptional. Well, I cannot come up with any other enterprise where one could rationally suggest the enterprise give away its services unless it saw a value in doing so.
Majesa-- your instincts are good. Avoid loans if you can. I would point out that you referred to loans as "aid." Loans are not aid, they have to be paid back and the interest charged is ALWAYS a consideration. I want to compliment you. Several posters have indicated that high school students need special education to understand the risk of debt financing of education. You appear to have "gotten it" without special ed.
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