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"If it's a bad bet for the bank, it must be far worse of a bet for young adults."

Not necessarily. Even if it's a good bet for the student, what's to stop them from declaring bankruptcy just after graduation, and before they start their lucrative career? They would then get all the upside, whilst the bank gets zero payments.




Trashing your credit score, with unfortunate consequences for your ability to buy a car, rent accommodation, apply for a mortgage, and avoid predatory debt collectors, sounds like a superbly practical debt management plan.

And if you have a job with decent money, obviously it wouldn't count as outright fraud at all.

But even that is missing the point. These loans are an economic time bomb. They rely entirely on a functioning economy with adequate middle class job opportunities.

If those disappear - if, for example, an unexpected black swan event happens to leaves a smoking crater where GDP growth used to be - banks lose a giant pile of money anyway.

The debt will be sold at cents to the dollar to collection agencies who will hound the victims, and anyone else who gets in the way by sharing an address, or having any form of financial connection - for the rest of their natural lives.




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