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<p>Not to sure what you mean by that, but it is an incorrect conclusion because most 18-year-olds have no job. They have no credit scores. They have no ability to repay the loan. They have no (documented) future ability to repay the loan. Without the government guarantee and prohibition from bankruptcy, the loans would not exist. Thus, no bubble.</p>
<p>Come, now. Students have no problem getting credit cards without income or credit scores.</p>
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<p>Banks wouldn’t require a paystub, they’re smart enough to figure out the prospective future earnings of an X major at school Y with GPA Z.</p>
<p>Not to argue that it’s good or bad, but what would happen if the government deregulated student loans is that the banks would require parents to co-sign. The banks would discriminate based on parent’s credit score, school attended, major, GPA, and possibly things like SAT score. There would be varying interest rates and maximum amount loaned based on these factors. </p>
<p>The following would result:</p>
<ol>
<li><p>Online schools and other schools with poor placement rates would disappear because their students wouldn’t get loans.</p></li>
<li><p>STEM majors would balloon and liberal arts majors would shrink because of the difference in average starting salaries and employment rates would make it easier to get loans for STEM majors.</p></li>
<li><p>The rate of college drop outs would grow quickly because someone with a low GPA would have a tough time getting a loan for future semesters.</p></li>
<li><p>Individuals coming from poor families would be disenfranchised because the lower credit rate and fewer assets would make those students riskier customers.</p></li>
<li><p>Lower tier schools would have to drop their cost of attendance to stay in business and higher tier schools could increase their cost of attendance.</p></li>
<li><p>Students from states with weaker flagship schools would be in a ton of trouble and you’d probably see more population migration to states with very strong in-state schools.</p></li>
</ol>
<p>
Do you have any evidence that high-wage earners were in fact defaulting at a higher rate? I think the loss of bankruptcy protection it is much more likely the result of high-priced lobbying and crony capitalism.</p>
<p>This nicely summarizes some of the current issues with student loans:
<a href=“http://www.collegescholarships.org/research/student-loan-scheme.jpg[/url]”>http://www.collegescholarships.org/research/student-loan-scheme.jpg</a></p>
<p>Have you heard about the Student Loan Forgiveness Act of 2012? If a student opts in will cap loan payments to 10 years at 10% of your income above 150% of poverty level, and then forgive them. For new students the amount is capped at $45K or so.</p>
<p>[Rep</a>. Hansen Clarke introduces The Student Loan Forgiveness Act of 2012 (H.R. 4170) | Congressman Hansen Clarke](<a href=“http://hansenclarke.house.gov/press-release/rep-hansen-clarke-introduces-student-loan-forgiveness-act-2012-hr-4170]Rep”>http://hansenclarke.house.gov/press-release/rep-hansen-clarke-introduces-student-loan-forgiveness-act-2012-hr-4170)</p>
<p>Apparently there is another bill in the works to restore some basic consumer protections to student loans, like the ability to discharge some or all of them in bankruptcy.</p>
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<p>Incorrect. Congress changed the law a couple of years ago precluding credit card companies from ‘giving’ a credit card to college students. (In the good old days, companies would hand out credit cards like candy.) Try calling a couple of credit card companies tomorrow, pretend you are an 18-year old Freshmen, with no job and no consigner…</p>
<p>I agree with all of your points except #2. The vast majority of college students do not have the mathematical ability to handle STEM.</p>
<p>Read and learn:</p>
<p><a href=“http://www.creditcards.com/credit-card-news/college-student-credit-card-law-1279.php[/url]”>http://www.creditcards.com/credit-card-news/college-student-credit-card-law-1279.php</a></p>
<p>all of these easily available student loans have helped drive college costs through the roof.</p>
<p>that said, I have little sympathy for someone that borrowed money and now doesn’t want to pay it back.</p>
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<p>There’s the catch. We were discussing what would happen in a world without legal restrictions on student loans. The world without legal restrictions on credit cards resulted in readily available credit to college students.</p>
<p>As an aside, how sad is it that the government has to step in and force adults to be responsible with credit cards?</p>
<p>I’m pretty sure someone hates me. (parent of 20 year old, 19 year old, 15 year old and 14 year old)</p>
![http://www.collegescholarships.org/research/student-loan-scheme.jpg[/url]](http://www.collegescholarships.org/research/student-loan-scheme.jpg%5B/url%5D){kind=link}
