I believe that all schools should have partial liability for the defaults of their students. You make a good point that this heavy-handed regulation of schools by shutting them down can hurt a few people who may benefit from alternative schools.
If all schools were partially liable for loan defaults (say 50%), they would pay far more attention into creating programs that have good job prospects and less on programs that just sound good. They'd also have an incentive to charge a reasonable tuition instead of maximizing the cost based on what can be borrowed. And they would spend a great deal more effort on job placement after graduation. The government would not have to pick and choose what schools to close down.
I dont want my school hustling me down the likeliest path to become corporate cannon fodder at ABC Corp when I'm trying to build a startup. Not everyone goes to school to "get a job".
Then don't go to school and just start your startup.
This conversation is about government backed education loans. It's not clear why the US government should be issuing education loans at all, let alone issuing them to students who are very unlikely to pay them back. Or at least have their real income greatly curtailed for decades by loan payments.
If you just want to get an education for personal reasons, figure out how to pay for it on your own without relying on taxpayers.
Well, from some policy makers' point of view, having a substantial fraction of the citizenry owe the government tens of thousands of dollars it alone has the power to forgive might be a very appealing bit of leverage.
If all schools were partially liable for loan defaults (say 50%), they would pay far more attention into creating programs that have good job prospects and less on programs that just sound good. They'd also have an incentive to charge a reasonable tuition instead of maximizing the cost based on what can be borrowed. And they would spend a great deal more effort on job placement after graduation. The government would not have to pick and choose what schools to close down.