Basically zero risk for colleges.
I have trouble explaining this to my parents enough though it's clearly true. They don't like the reality that their votes to "cut taxes" for 30 years has doomed their own children to a decade of debt and not being able to afford a house.
http://www.newstrategist.com/wp-content/uploads/2017/01/BB8....
When you give the masses an easy way to go to school and colleges (which are basically educational guilds nowadays) started upping the costs immensely. Colleges knew the writing was on the wall now that students didn't just need to save money and work using solely their own capital. They could get it by the government. The only one who truly bore the risk was the government backed borrowers.
The cost crises led to our crazy loan system.
All speculative, but individual pieces of evidence I've found point to this being likely
If you capped how much banks could loan on guarantee, you’d see prices for schools drop pretty sharp. Mark Cuban has talked about this a bunch over the years.
I'm not a history buff but this is how I interpret us reaching out current situation. Undischargeable loans is debt slavery and should be abolished. The very purpose of bankruptcy is to prevent situations like this.
The realistic outcomes are either government bailing itself out on discharged loans (after all, the school has already been paid). Or, probably a better decision, increasing state school funding to the dollars per student that existed in decades prior. Option 2 would be extremely difficult politically until mellenials overtake baby boomers as the dominant voting bloc in a decade or two
