Why is everything so expensive in the US? I pay less than 1000 euros a year in university taxes.
Imagine you gave an 18-year-old a credit card with a $100K limit and no payments for 5 years. Then tell them to go buy a car. What do you think would happen? A lot will probably end up buying extravagantly expensive choices like brand new Hummers or BMWs. Not many would buy a 5-year-old Honda Civic, even if it is much cheaper, more reliable, and gets you around just as well. People in general - but teenagers especially - are not particularly good at thinking through the consequences of decisions that they won't have to face for 5 years or more. And for someone who is not financially independent, a sum like $100K is basically an abstract concept. It doesn't sound much different to them compared to $20K or $200K, because they have never had to pay off a sum that large before.
The student loan system basically works like that. Most students don't really make cost a primary factor when selecting a college, because they aren't thinking about how difficult it will be to pay off those loans down the road. Instead they choose colleges because they liked what they saw on the campus tour or the school has a good reputation. Of course, this incentives schools to spend a lot of money on the type of things that influence these enrollment decisions, many of which are amenities not really related to educations. Stuff like building fancy new gyms, high end food in cafeterias, sponsoring tons of student recreational clubs, etc. This drives up costs.
Cheaper options exist in the US, but most students don't take them because they are not price-conscious, and we have a culture where parents' are expected to tell kids to "follow their dreams" rather than telling them to be prudent.
Every loan should be bankruptable, otherwise there's no reason to ever lower prices and it's free money to those that hand it out for.. handing out money they never had to people that don't have it.
There are tradeoffs, though. If you start allowing defaults on student loans, interest rates will go up to compensate. So now you are punishing the people who do pay off their loans on time. If banks start taking default risk into consideration when giving out loans, they may be unwilling to give loans to poor people because they are a higher default risk.
