Because most of these students will likely default. And once the tax base drops, other government budgets are impacted resulting in a net loss for society. The alternative is the government only offers loans to students majoring in fields that lead to jobs capable of repaying.

Because that was the deal.

It is, of course, possible for the federal government to craft a deal that's actually bad for the American people.

When discovered to be so, it's also possible to alter the deal.

I agreed to this deal and I feel like I do need to pay off the debt, but I'm lucky in that I have a job that will allow me to do it the normal way if the crypto market crashes (heaven forbid, plz). What about the 18 year olds whose helicopter parents never allowed them to imagine a filthy reality like failing to go to college?

Regardless of whether that kid should have been free-thinking enough to see outside their existence's bubble, it's irresponsible to exploit their ignorance for profit. Most of these kids haven't ever seen a debt-ridden life like they're signing up for. I grew up with parents who ranted and raged about debt, and I still did it. Are you sure the problem lies with the kids signing the papers (I guess clicking the "Get your loan here!" button these days)?

The deal is that student loans in chapter 7 bankruptcy can only be discharged for undue hardship. Chapter 13 can't discharge student loans according to my understanding.

Last time I checked, "the deal" as it were indicates, in writing, that student loan debt from the federal government is forgiven on death.