The problem is how much people in the US spend on getting a college education, not the funding mechanism. (ie living away from home, rather than living at home like most of us do in Aus).
If I'm buying a hundred thousand tuitions, presumably I can negotiate a lower price far easier than if I'm buying one. Additionally, even if their total monthly income was the same, not being in a large amount of debt could be a positive. Many would feel more comfortable taking a loan to start a business or build a house, and it would be easier to justify spending without needing to worry about debt interest.
I agree that this debt isn't helping achieve other goals, but it's magnitude seems small compared to large financial goals like home purchases. If you weren't going to qualify for the $300k mortgage (less down payment), it wasn't because you had student debt; it was become you didn't have the income.
My point being, this debt isn't crushing. It delays other financial milestones, but it shouldn't end them. However, if the discussion was about borrowers that are taking 6-figure student loans and then becoming baristas, well I would agree that person is definitely shackled for life -- but that situation isn't representative of the typical college graduate. The typical graduate has about $25k in student loans.
I've gone through foreclosure on an underwater property, I can speak to that. When I was 21 and had far more money (relative to my age) than sense, I bought a $160K 1 BR condo in downtown Atlanta on underwriting terms that could only be described as housing bubblicious, and which certainly could not be found after the Great Recession. I got an 80/20 loan with 6.625% APR on the primary loan and 8.25% on the secondary. For May 2007, that wasn't terribly bad, considering it was a non-conforming property and I had barely six months of income history at the level necessary to qualify, and hardly any credit history.
A mere three months later, those rates looked absolutely hilarious. Nevertheless, I kept paying for 6-7 more years. These were more or less default payments on 30-year notes, so obviously front-loaded with interest, so in 2015 I still owed $140k. Well, even in 2015, the property was worth $85k. I walked away for various reasons I don't need to get into here, and the primary lender went so far as to sue me for a $29k deficiency, to the great surprise of most people in the know. The other lender forgave the $26k principal outstanding.
But the point is, that's something like a worst-case outcome (-48% underwater) of a real estate transaction. It's not at all like being made to pay back the entire $160k + interest! :)
Of course, having learnt the lesson I did in the particular way I did, I'm not convinced that owning real estate is a particularly good course of action for most young people anyway. Unfortunately, we've got policy incentives that heavily skew toward owning over renting, mainly the mortgage interest tax deduction. That was my reasoning for buying: "A mostly tax-deductible monthly housing payment? Sounds good to me!"
A student debt is different than a mortgage in that with a mortgage there is collateral. This reduces the risk to both parties considerably because usually the collateral can be used to settle the debt if needed.
I forget which of the ancient philosophers said it but to paraphrase: "it is basically unethical to place a mortgage on yourself (because you are the collateral)". Not too far from what you are effectively doing when taking on a student loan.
The Average was $37k in 2016, up 6% on the year before. [1]
That makes my $15k(USD) debt look pretty low.
[1] https://studentloanhero.com/student-loan-debt-statistics/
My load from Australia is interest free, I only have to pay it back at a very low rate when I earn over $45k per year, and it was $20k (TOTAL!) for a 5 year Bachelor of Software Engineering.