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Virtually all other consumer loans are underwritten to some standard: auto loans, mortgages, small business/commerical loans, etc.
For student loans what they should do is look at your major and school to determine your first year's interest rate. In subsequent years, they'd also consider your GPA. Eg, if you're an art major with a 2.5 GPA at some crap school, you should be paying 9% but an EE major with a 3.8 GPA should pay 4%.
The interest rate is supposed to reflect default/delinquency risk, so why do all students with the same type of loan pay the same rate? I'm guessing all those psychology professors wouldn't be too happy if student loans were underwritten as I described because it'd mean less students for them and hence more layoffs. But this approach would force students to reconsider borrowing money for useless degrees, and it'd be a wiser way of subsidizing loans with taxpayer dollars