Perhaps your analysis of second-order effects is not thorough and complete? Have you really considered all of them?
I don't really think we need to forgive student loans - I think they should absolutely be dischargeable through bankruptcy, though.
Bankruptcy isn't a "get out of jail free" card - it puts a huge burden on a student relatively soon after graduating that makes it harder to start a family or buy a home. So it incentives are still aligned for the students taking the loans.
But the option that a student defaults brings some real light and transparency into a loan system that just feels wildly disconnected from reality right now. If a student can't pay the loan back with the job options in the field and is like to default... don't issue the loan.
I think it's absolutely abusive that student debt can't be discharged, and is pretty heinous as policy.
1) Zero risk does not mean 0% interest. True zero risk should have the same yield as treasuries.
2) No bankruptcy does not equal guaranteed payment. Some will die without having repaid.
Neither do I. I was happy with the status quo ante Trump where many classes of public servant could get their student debts forgiven after on the order of ten years of service. (An imperfect program with too many disqualifying loopholes, but it was better than nothing. Now, almost no one qualifies.) The Overton window has foreclosed on that kind of solution to the problem, however. Even military personnel have been disqualified from attending certain schools as part of their meager education benefit.
> Bankruptcy isn't a "get out of jail free" card
Indeed. One’s mid-twenties are arguably the worst period of one’s life to live with damaged credit.
> I think it's absolutely abusive that student debt can't be discharged, and is pretty heinous as policy.
Absolutely, it needs to go.
It would be like if instead of a foreclosure they just took a bulldozer to the house, then salted the earth with asbestos and lead so nobody could ever build a house there again. What's the (acute) benefit in just destroying the value? Plus, it turns the four years into a complete waste of time, no matter how hard you worked to get the degree, just because you couldn't find employment after.
I know we're talking about tweaking incentives to make it not worth it to game the system, but this would also screw over people that found themselves in that position through no fault of their own, plus it would waste all the time and work of everyone that taught that person and contributed to their education (even though they got paid, people largely aren't in education for the cash).
I don't know, I think it would be too much of a bummer to work.
A harsh lesson in personal responsibility. If you went to an out-of-state school to major in criminology hoping to be the next CSI, and you borrowed 180k to do it, you've learned a valuable lesson.
Don't give me "they're only kids, they aren't able to make these decisions!"
You’re responding to something you imagined I said. We’re talking about economic effects here, not your vengeful little morality play.