How does your argument fail to also apply to student loans?

People can decide on what terms they want to loan money to, or invest in, a business, based on how likely they think it is to succeed. And if they guess wrong, tough luck, they should've been smarter. The incentive structure here is to make it easier to raise money with good ideas and harder to raise money with stupid ones.

This incentive structure doesn't exist with student loans: student loans are unconditional, and with terms that don't take into account likelihood of payback.

The difference is you _can't_ do that for student loans. There is no option to get rid of them via bankruptcy.

So, this happens instead.

Yeah because then most students would graduate and declaring bankruptcy would be the first thing they do out of school. People have almost no assets at that point that they can lose, no real income. They would ride out the 7 years of bad credit while building out their early career and essentially would get a free education. The financial system wouldn’t be able to manage that at the pure scale of the number of people that use student loans.

I did not suggest that you could just turn on bankruptcy with no rules.

> [...] essentially would get a free education.

How horrible, imagine the world.