I have
very mixed feelings on that
On the one hand, yes, I agree that you shouldn't borrow money you have no
intention to repay. And my sympathy for people who get majors in predictably absurd, low-value topics is minimal. Though I'd bet that most dumb college students 18-21 years old do start out with good intentions and do expect to live the American dream and repay their debts along their career journey. We're all optimistic about our futures. It's only later on when they near graduation and are applying for jobs that they realize "
holy **** this degree isn't worth the paper it's written on!" and scaling their mountain of debt starts to look like an impossible feat. Sure, at that point much of the blame falls on them. But a lot of it also falls on a system that is utterly ***king broken.
An aside: When I say broken, I mean: we have lenders with no underwriting standards giving eye-watering sums of money to inexperienced almost-child aged people so they can spend money at institutions that provide little value and specialize more in marketing their own "college experience" than an education -- whilst constantly jacking up prices every year. And this all occurs while being supported by a societal backdrop where we collectively tell kids if they don't go to college they are essentially a dumb failure who wasn't smart enough. So the trap is kind of set for them, all they need to do is step into it (
usually with happy parents in the background cheering them on for going to school).
On the other hand, being a finance guy, I view loans as contracts. And a not-small part of these contracts prescribes what will happen in great detail in the event of default. If you fail to pay, we enter this other part of the contract that tells us how to handle it per our agreement. There's nothing morally wrong*, unethical or illegal about defaulting. Defaults occur in the ordinary course of a lender's business and any decent sized lender/servicer is going to have departments dedicated specifically to workout situations (and not all of those situations are totally adversarial either).
As much as possible, defaulting on a loan like this should be a dispassionate, calculated financial decision. Governments, companies, sophisticated financiers and high net worth individuals involved in business ventures do this all the time and it's not considered moral rot or a lack of ethics, it's just business. They don't feel any moral compulsion to repay the full value even if they could, just fulfill the terms of the contract (including what occurs in default). I have a hard time looking at student loans any differently. If the debtor wants to take the wage garnishment route, that's an acceptable outcome of the contract they entered into. The same as a company might still have cash on hand to make a payment, but intentionally fails to pay, so too may a student.
Protecting against these outcomes is the role of the people who underwrite the loans, which because of our totally F'd up system, pretty much doesn't exist. Having a huge wave of people unwilling or unable to pay may help force our hand in finally addressing an issue that's been out of control for a long time.
*The only way I could consider it morally wrong is it you borrowed from an unsophisticated party, like family and friends, who are not in the business of assessing risk - and then you willingly fail to pay them back. Or if you flat out lied in your loan application to a sophisticated party, in which case it's obviously morally wrong.
