Its understandable the reason why: Because education is an intangible thing with no equity value. If I give you loan to buy a car, I retain a lean on the physical vehicle and if you default I regain control over the car.
If I give you $100K for your "education" and you default I get nothing.
However, it has created very perverse effects. If student-loan borrowers were allowed to default it would increase the interest rates for other borrowers, making the loans more expensive. Which would in turn put downward pressure on the cost of tuition
An alternative system would be something like the old patronage system of middle ages. Companies would send you to college but then mandate that you must work for them for 10-15 years post graduation
All in all that may be more directly beneficial for all parties.
Its understandable the reason why: Because education is an intangible thing with no equity value. If I give you loan to buy a car, I retain a lean on the physical vehicle and if you default I regain control over the car.
If I give you $100K for your "education" and you default I get nothing.
However, it has created very perverse effects. If student-loan borrowers were allowed to default it would increase the interest rates for other borrowers, making the loans more expensive. Which would in turn put downward pressure on the cost of tuition
An alternative system would be something like the old patronage system of middle ages. Companies would send you to college but then mandate that you must work for them for 10-15 years post graduation
All in all that may be more directly beneficial for all parties.