I would reckon that this is because default is not the same as bankruptcy: it is entirely possible for someone to be late or stop making payments altogether and not go through the formal process of bankruptcy. I would further guess that buyers are primarily concerned with stability of these cash flows, with prices being determined upon that basis.<p>There are probably many people making their living attempting to estimate the relative likelihoods of student loan defaults, distilling this paper into tranches and repackaging them into bundles to be resold to investors.