While you can't default on the loans -- if you have the federal direct loan agency maintain the loan, it is relatively forgiving arrangement. They let you defer the loans almost indefinitely if you're near the poverty line or have any sort of hardship. They will also limit payments to a percentage of income... regardless of how much you owe. I've missed payments & they've re-set my schedule with almost no problems. They don't fine you to death. Overall, it's probably the most pleasant financial transaction I've ever engaged.
The relationship being so pleasant probably makes the problem worse, because there are fewer horror stories to warn young people away from the easy credit. The availability of this credit allows colleges to just keep increasing and increasing tuition at a time when education should be getting cheaper and fewer people can afford it.
