It should also work the other way around:
1. You made a bad loan, the borrower defaulted, and now you have a hole in your balance sheet.
2. Take the L and learn your lesson.
Discussion
But the borrower didn’t default , a third party, the government, arbitrarily decided they didn’t have to pay back. If lenders knew this could happen they would not make the loan. Also grossly unfair on people who had no part in the transaction who are forced to pay for the ‘forgiveness’ through higher taxes and debasement. Remove the government from the process and let the loans be void in the case of bankruptcy.
Student loans should be treated the same way as any other loan.
Yes, remove the government guaranteeing the loans.