system
Given the following post, respond as if you're commenting on Reddit:
human
CMV: Student Loans Should Not be Guaranteed by the Government

I was surprised to see that this topic has not been debated on this sub recently in light of current events. My view here is not related to proposed debt forgiveness plans, but rather specifically to the idea that the federal government should not guarantee student loans.

**Pros of student loan guarantees**

They make college more accessible by making it possible to extend affordable loans to people with little to no credit history. 

**Cons of student loan guarantees**

They introduce a perverse incentive for colleges to raise tuition to the highest level that a prospective student is willing to take on in debt since there are no risk or credit controls.

They introduce a perverse incentive for colleges to admit as many students as possible even when it might not be in a prospective student's best interest.

They introduce a perverse incentive for colleges to direct unnecessary spending toward attracting students with amenities and create budget sinks to justify increased tuitions, entrenching them at their higher costs.

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I strongly believe that the "pro" is important, but I don't think guaranteeing student loans is the only or best way to achieve it.

**Edit because this is a theme**: I wouldn't support getting rid of the guarantee without a good transition plan. The objective should not be to reduce enrollment, but to reduce the per student spending dependant on tuition.
gpt
In the US, student loans are issues by the government typically and not dischargable in bankruptcy.

The primary reason is because the people getting the loans represent an incredibly poor credit risk. These are unsecured loans (no collateral).  Without those steps, the loans would be far more expensive for students with far less resources (money lent) available. Think credit cards for cost and limits. Student loans exist the way they do now because of these protections. They would be far worse without them.

I think the 'incentive' you mention for colleges is way overblown. The fact is colleges want a specific type of student who will succeed. Their reputation depends on it. They really don't care if people borrow to go there or pay cash. It is the same money to them. 

If colleges really did maximize the number of people coming in for 'profit', you would see their quality and rankings go down which is a net negative for the college. Why would you go to an inferior school after all?