Glenn Reynolds’s College-Bubble Battle
The Instapundit strikes again, this time with a great idea about how to make colleges more accountable for the loans they offer students:
For higher education, the solution is more value for less money. Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years — but with the school that received the money on the hook for all or part of the unpaid balance.
Up until now, the loan guarantees have meant that colleges, like the writers of subprime mortgages a few years ago, got their money up front, with any problems in payment falling on someone else.
Make defaults expensive to colleges, and they’ll become much more careful about how much they lend and what kinds of programs they offer.