The reason they aren't dischargeable is because what bank in their right mind would give a loan to an 18 year old with no collateral? They only guarantee they get that it will be paid back is the fact that it can't be discharged.And yet somehow banks were happy to do so until 2005.
Student loans would dry up overnight if they could be discharged at bankruptcy.
That being said, I actually think that's a good thing, because it would force colleges to charge reasonable tuition rates and also offer scholarships if they want to get the best students.
Both of these statements I agree with. The larger the loan, the better the guarantee that banks want.
Every measure that we take to make it easier for students to pay tuition without imposing cost controls results in increases in tuition. The result is that tuition has been growing faster than inflation for many decades, and the trend is unsustainable.
But barring shifting to a European model of college funding, I don't see the US allowing dischargeable loans, nor do I think they should, because the reality of it is that colleges won't reduce their rates nor increase their scholarships, they would just be completely out of reach of poor and middle class students.
This I disagree with. Universities are businesses. The bulk of their customers are able to pay thanks to loan guarantees backed by special government rules. Take away those loan guarantees and the universities will have to figure out how to live without customers, or without charging so much.
That said, you can't get there without creating a crisis that forces universities to make hard choices that they have been avoiding for decades.