Gamblers are under a very autonomous incentive structure: they want to gamble, and they can be scared into not doing so by consequences that would befall them personally.
Student loans don't work like this, I think, because most kids going to college aren't doing so because they want to. Instead, they think they need to, either because their parents demand it, or society demands it.
When you think you need to do something (i.e. there are no other options/routes to not-dying), adding risks to it doesn't have any effect on the math.
Sure, but that's the mob, and I see two important differences between this case and the mob. (Well, one important difference, and one thing that might be, I'm not sure.) As the article points out, there's any number of other things you could do in case of default, that won't so adversely affect the borrower's ability to later repay. But (difference number one) I suspect those things will largely rely on the courts and so not be available to the mob. (That's the one I'm not sure about; the mob might have other equivalents.)
I mean, yes, the basic reasoning makes sense, but like... were any actual calculations done? Any comparison to alternatives? While it's not impossible this is the best way for the government to get its money back, it seems pretty unlikely.
It particular it seems stupid because, consider -- we're reading a news article about it! What's that mean? It means I didn't already know, you didn't already know, enough people didn't already know that the newspaper thought it would be a good idea for an article. And that's the real kicker; a deterrent -- and this is purely a deterrent, it is in fact giving up direct moneymaking ability to achieve this deterrent -- can only work if people know about it! The mob can scare people into paying up because everyone knows they'll kill or cripple you if you don't pay them back. But the government, apparently, doesn't have the mob's publicity, and without that, the whole scheme falls to pieces, and clearly can't do any good. This started in in 1990, going by the article. That's 30 years of a "deterrent" that hardly anybody knows they have to avoid. (That, obviously, is the difference I'm more certain of. :P )
When the mob cripples/kills a gambler who can't pay, they're not trying to get the money back. They're sending a message to other gamblers.