> That is the actual reason for the government giving student loans instead of the banks - there really isn't a good way to tell if someone will pay it back, and no one has had enough time to prove responsibility at that age.

Fair point, but if it is really true that there is no way whatsoever to establish credit-worthiness, I don't think anyone (government or private business) should be issuing student loans.

Yet, are you sure that just because these kids^H^H^H^H young adults don't have a credit score that there isn't a way for banks to assess the likelihood of repayment? We all have ways of informally assessing a person's likelihood of success (and therefore at least their ability to repay). We look at things like SAT scores, college GPA, the quality of their school, the quality of their choice in major, etc. Banks could make the credit available to a student each year/semester dependent upon whatever of these factors are available. Banks could try out different risk-assessment models and the market would select those banks that have good enough models to produce a return on investment.

And if our current credit score system is the only way to reliably measure credit-worthiness, why not use it? The obvious negative consequences include delaying when people can get a start on their career, and just the general economic chaos that would result from drastically altering the incentives at play. I am skeptical of radical change, but it is not immediately obvious that these negatives (while serious) are less than the consequences of our current usurious system.