I think this is just a terrible situation for everyone involved. When growing up it was hammered into us that you needed to go to university to be able to be successful in the world, and so a lot of people went into university not to get a specific degree or anything but to get that piece of paper. The price was hidden behind the easy availability of student loans and the fact that 18 year-olds don't have the career experience or even life experience to really put the total cost into perspective. Is $20,000/year good or bad if your salary is going to be $40,000? What if your salary is $100,000? In addition, the returns to education weren't very obvious, since data on graduate income has only recently been published, and because of the confound that in prior years, university graduation was heavily influenced by parental success, personal ambition, and intelligence, which meant that those people who were likely to go to university would also be the kind of people who would be at the top of the non-University class.
I'm not saying they'd be just as well off if they didn't go to University; what I'm saying is this: In 1960, not go to University, they'd likely have greater career outcomes than other people who didn't go to University because of characteristics that were not affected going to education such as parental success, personal ambition, intelligence, etc. This means that the supposed return to education is possibly less than how it appears because those characteristics are a confound that are entirely separate from the knowledge you learn at University.
Universities seem to have taken advantage of the "need" to attend by raising prices, competing for students with excessive luxuries (compared to universities in other countries), and by achieving near perfect price discrimination through the use of scholarships (which allow them to charge each customer's willingness to pay -- a very desirable achievement!) At the same time, we've seen the Administrative class become more bloated, and the power and influence of professors decrease. For instance:
"In 2003, when 5,307 undergraduate students studied on campus, the University employed 3,500 administrators and managers. In 2019, before the COVID-19 pandemic’s effects on student enrollment, only 600 more students were living and studying at Yale, yet the number of administrators had risen by more than 1,500 — a nearly 45 percent hike." [0]
It seems that the increase in non-educational spending has no signs of slowing down, and as long as Americans are willing to pay the high education costs, we shouldn't expect University budgets or spending to decrease. Which brings the question: what happens if we make education free? It's obviously not actually free, someone has to pay for it, and it would be the American taxpayer in some way. But how can we get Universities to pull back spending? How do we get them to focus on educational spending and increasing human capital rather than administrative headcount or the university of experience?
That's my issue with the situation. We shouldn't have this loan issue -- University shouldn't cost this much to begin, and paying the Universities to solve a problem (i.e. high cost) that they created seems like a terrible incentive.
[0] https://yaledailynews.com/blog/2021/11/10/reluctance-on-the-...