So the student loan asset backed securities (ABS) market is roughly one fifth the size of the home mortgage ABS market. Arguably, that means that a collapse in the student loan market would necessarily have less deleterious effects than what we saw in the mortgage crisis. However, I suspect that a large portion of the student loans issued have co-signers who have mortgages (ie, their parents). If this is true, a collapse in the student loan market should put further strain on the mortgage market, as co-signers who are legally required to pick up the slack in their co-signee's loan payments become less able to afford their mortgages. In that light, the un-expungebility of student loans takes on a new, darker tone.
Actually, I don't know the law on that subject: if a student has a co-signer on their student loans, and the student declares bankruptcy (or even dies), does the co-signer become responsible for the loan? I would imagine that they do. What if the co-signer also declares bankruptcy? Based on the logic of student-loans, I would expect both parties are still on the hook. This hasto have already been played out in court, what has been the result? It's now that I wish I had a clan of loyal followers and commentators who would dig up the answers to such questions, as seems to happen on popular econ blogs.
