Quote Originally Posted by vertical_doug View Post
Kids should do what the wealthy do. They form a corporation and the corporation enrollss college and borrows money. The student is merely an employee of the corporation there to perform the work on behalf of the corporation. If after graduation, the corporation can not service it's debts, the corporation declares bankruptcy and defaults. The student fortunately, is just an employee, so he is free to leave and look for a new job with no consequence.

Glenn. Moral Hazard is very real, but in our present system, it only applies to the poor.
I believe i understand your point and probably agree with 99% of it.

'We' as a country should never offer a teenager a loan that everyone involved on the front end transaction knows will end in personal tragedy. And that tragedy remains the on the student....not the school or the lender.

The only flaw that I find in your example is that no bank would lend that 'corporation' any money. That is sort of a system 'fail safe'. Sort of like if I try to take a loan for a $400K supercar, unless the government guarantees that loan, no bank would make that loan. The student-loan process has no such 'fail safe'. And it is non-dischargeable for the borrower.

I'd like to see schools make these loans to their students and live/die by the success/failure of their graduates. Sort of making the schools stand behind the product they are selling and also making schools feel the pain when a loan can not be repaid.