Much of this debt was never spent it was created from thin air due to interest. Saying someone does not get profit is very different from saying they don’t get principal.

But more directly these people and institutions made a bet, the fact not all bets win is a basic fact of life.

PS: I have negligible student debt at sub inflation interest rates remaining. But, for people with 8+% interest rate loans that interest should very much should be on the table at a minimum.