Interesting Student Loan Bankruptcy Plan Advocated by the Weekly Standard

I'm sure some economist could poke holes in this idea but it might be a good thing for the CBO or someone to give this idea a green-eyeshade once over.

If we are concerned that allowing students to escape student debt via bankruptcy might open up the college loan market to the same moral hazard problems that befell the mortgage market and will leave the government on the hook, we could make the institution of higher learning assume their loan payments after a bankruptcy. That might make schools think twice before they admit a marginal prospect and charge them thousands of dollars for an education that might not do them much good, and it might make students think twice about disdaining lower-price options, such as the junior college near their home.

If the school had to write off the debt and have a large "allowance for doubtful accounts" line item put onto their books it might change the landscape of college. I know there would be know 8% or more per year tuition raises and I have a feeling that many marginal colleges might close their doors. Those small private schools with the $36,000 a year tuition does not look as good if they would be on the hook for those bankrupt students.