Student Loan Bailout

"Moral hazard is taking someone else's money and not being responsible for it."
--Gordon Gekko (Wall Street: Money Never Sleeps)

"Moral hazard means once someone bails you out, what's stopping you from taking another shot?"
--Jacob Moore (Wall Street: Money Never Sleeps)

After the Obama administration indicated that it is studying "new bankruptcy options" for student loan borrows, ZeroHedge notes that various progressive groups are jumping on the bandwagon with petitions to cancel all student debt.

These pages have discussed the bubble in higher ed for some time (ex here, here, here).  Student loan debt is now north of $1 trillion and is far higher than credit card debt levels and growth rates. Some forecasts estimate student loan debt greater than $3 trillion a decade from now.

That number seems conservative if loans will be forgiven (debt 'forgiveness' of course is a deceptive term here as cancelling debt means that someone who lent resources will not get them back). How much would YOU borrow for any endeavor knowing that someone will bail you out in the event of problems? If you were an institution, how much would you charge for tuition knowing that buyer behavior is being subsidized?

As ZH observes, we are institutionalizing moral hazard.