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And then the government will step in. They will tell everybody that these companies are too big to fail, and hence the market rules don't apply to them. And eventually the government will bail them out--with tax payers money. https://www.youtube.com/watch?v=Bu2wNKlVRzE

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“These companies” are the US Federal government, at least for undergraduate loans. The Department of Education took over all federally guaranteed loans (the vast majority of undergraduate loans) almost a decade ago. They’re only serviced by private companies, who wouldn’t need a bailout; it would only be the taxpayer on the hook.

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