However, even though a system that allows for strong enforcement of repayment reduces the credit risk margin lenders charge, it also imposes larger costs on unfortunate borrowers. So, for example, should a student who chose the wrong college for studies and ended up having to pay back huge loans with only a mediocre job be penalized for life? We need a system that has some flexibility in repayment, so that those who make bad choices or have bad luck can get some relief. At the same time, they should not escape all responsibility, else we will see people borrowing excessively and misusing the
...more
