my understanding is that it used to work like that, but it was abused by people graduating from med school and law school to dump all their debt.Nice idea, but you have to think about the secondary effects. Do you know how the market would "handle" that idea? By cutting the availability of student loans by, oh, maybe 90%.
Do you think insurance companies are going to lend $100,000+ to 18-year-olds with no assets, no income, no guarantee of future employment and no collateral, when all they have to do is declare bankruptcy -- at a time when they have nothing anyway -- and then just walk away from it?
You could call your proposal the Student Loan Elimination Act.