I’m not American so the concept of a college loan is very alien to me. In my country we either pay for college tuition up front, apply for financial aid if our grades are high enough and your family is needy enough, or you don’t go at all. And In some public universities, tuition is either wholly or partially government subsidized.
I’ve heard of Americans complaining how they’ve got thousands of dollars in college debt and in some cases they take your whole adult life to pay off. So why are college loans even a thing in the US and what happens when you’re not able to pay it off?
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It’s worth pointing out that the US has one of the highest college education rates in the world, higher than every European country except Luxembourg and (somehow) Russia. On top of this, many US colleges offer educations that, whether or not they are truly worth the money, are the envy of the world, both in terms of the doors they open and the overall student experience. In contrast, many countries take the approach of offering free or low cost college but to a much smaller fraction of their citizens, and these arrangements are often much more utilitarian with students living at home when possible and studying a very specific and focused curriculum.
So all those loans are the U.S. collectively shouldering the cost of having such a large and fancy system of higher education. Somebody has to pay for it (this is even true of systems where college is “free”. It just means that taxpayers are dividing the cost). Where the U.S. has run into problems (as it always does) is in devising a torturously complicated public-private system of paying for it, full of perverse incentives, eye-popping (but often irrelevant) sticker prices, and just enough rope for the uninitiated to hang themselves. Even if the system ends up working well enough,* it’s confusing and dangerous enough that it probably ought to be reformed anyway.
*To some of your specific questions: it’s difficult/impossible to get rid of college loans in bankruptcy, but it’s also very hard to compel someone to pay them. 10-20% of college loans eventually get written off because the person who took them out can’t (or won’t) pay.
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