A big problem here are the schools. A lot of degrees are just not worth the money and a lot of schools essentially trick students into getting into enormous amounts of debt based on unrealistic expectations for their careers.
I think a solution will be for the government to be more selective in which student loans it guarantees. I.e., the government should honestly survey the types of degrees that are needed for the economy and only provide loan guarantees for those degrees and for institutions that have shown they can train people properly in those degrees. If schools want to provide other degrees they can but they would have to rely on the free market.
Also, bankruptcy law should be changed to allow people to discharge their student loans in bankruptcy. I think that if a person shows (i) hardship and (ii) that they are not using their education in any way or form, they should be able to discharge their loan provided that their loan will be reinstated if they start using their education.
Be very careful what you wish for in the last point.
Anything that makes students loans less "guaranteed" will make them much less available. Right now, the only way to "game the system" is to die. If you allow someone to take $250K of student loan debt and then just piss off and do something that "doesn't use that education" and have it discharged, think about how much harder it will be for some other middle class kid to get a student loan to pursue their dream.
ObDisclaimer: My student loans are long ago paid off, partly because I prostituted myself to ROTC to pay for 80% of MIT or so. Still, I'd have hated to be unable to attend MIT (my dream since age 11) because student loans were unavailable because the repayment guarantee became only as good as a routine personal loan.
I think a solution will be for the government to be more selective in which student loans it guarantees. I.e., the government should honestly survey the types of degrees that are needed for the economy and only provide loan guarantees for those degrees and for institutions that have shown they can train people properly in those degrees. If schools want to provide other degrees they can but they would have to rely on the free market.
Also, bankruptcy law should be changed to allow people to discharge their student loans in bankruptcy. I think that if a person shows (i) hardship and (ii) that they are not using their education in any way or form, they should be able to discharge their loan provided that their loan will be reinstated if they start using their education.