And whose fault is that? It's the parents and advisors that said "go to college and you'll get a good job" when they weren't cut out for it (or didn't even want to do it). It's the voters who pushed for students loans "to give all of our students a chance".
If you give people who aren't cut out to do something, a chance to do that thing, it's expected that more people will fail. We are now living with the predictable result of pushing unmotivated and uninterested kids to "just try it out", and handing them a credit card to do it with.
The universities were happy to take the money, from the elite-but-useless private schools to the underfunded but more practical public engineering colleges. Only changing the incentives will change the results.
Universities certainly have the incentive to take money when people are lining up to give it to them. I don't blame people for doing their job to grow their institutions.
You'd think students would be incentivized enough not to dig themselves into thousands of dollars in debt, but students are also incentivized by the wishes of their parents and the promises of a good future. Incentives don't have to be in someone's best interest to be motivating.
The real problem is the guaranteed federally-backed loans that aren't dischargeable. Remove that and the tuition fees and attendance will come back down to earth.
I doubt that reducing the consequences to borrowing will lead to less borrowing. The opposite would happen.
Universities don't care if you default on your loans, they've already been paid.
If they're dischargeable, rates will just go up, or the government will have to subsidize them further. 17 year old kids aren't choosing whether to go to college based on whether the rate they get on their loan swings a few points in either direction.
The bad public policy in this case is a symptom of cultural expectations, not the other way around.
If a politician runs a campaign on “reducing student loan assistance” they will have committed political suicide and it won’t change the minds of any mother pushing their 17 year old son to go to college.
If you give people who aren't cut out to do something, a chance to do that thing, it's expected that more people will fail. We are now living with the predictable result of pushing unmotivated and uninterested kids to "just try it out", and handing them a credit card to do it with.