I think you're using the word "risk" idiosyncratically. Student loans are unsecured, and most people are done with them by the time they're 23. If they're dischargeable in bankruptcy, for a lot of people, it's irrational not to default on them; the bankruptcy is gone long before your credit history matters.

That sounds nice but it requires there to be a definition of "societally high-reward education". That is difficult. Even if you find some methodology to identify the quality programs that have an appropriate "societal reward" you have to deal with the problem that the costs for those programs will inevitably rise in lock step to the amount of tax dollars used to subsidize them. (See https://www.newyorkfed.org/medialibrary/media/research/staff...)

I would suggest the federal government get out of educational loans entirely. Let the private loan market evaluate and take the risks, probably with an income based repayment contract that favored degrees/programs that are likely to lead to reasonable incomes.

Steve Jobs had an English degree. Would most STEM obsessed industrialised file that under 'favoured'?

Who knows? Like I said that is a difficult decision and I'd rather those decisions be made by individuals. They can decide if taking out a loan to get an English degree is worthwhile. And if they can't find someone to loan them the money, they may have find a different approach.

The more you "favor" particular degrees, the faster you you saturate the market with new graduates. The eventual outcome being those jobs are no longer in high demand, nor pay a decent salary

Yep. That is called "the market". And I think the government shouldn't get in the way and "favor" anything. Let people decide their own careers and interests and let them balance the pros and cons.

It does, to an extent. Stafford and Perkins loans are direct from the government.

This article says 90% of student loans are from the gov't, so it appears it currently does exactly what you're suggesting. https://www.nationalreview.com/2017/02/student-loans-governm...

The loan programs don't adjust the interest rates for the risk/reward involved. As a taxpayer I don't want to fund someone for 4 years in college and then have them default or be be unqualified for a job that would make them self sufficient.

I'd rather have non of my tax dollars allocated that way, but if I don't have a choice then there should be some attempt to invest in people and skills that produce self-sufficient citizens.

12 years is enough, if we wanted it to mean something instead of day care.