Loans will only be granted to students who have a track record of high achievement, parents willing to co-sign, and going into majors that make economic sense.
Enrollment will drop, universities will stop offering passion majors, mass layoffs in library science, academia, and college administrations (likely to the tune of 1M+ people).
In the end, students will be told by federal examination which school and major they get to pursue, or whether they get to go to college at all.
That's assuming the government is both effective and efficient in this process.
This is essentially how most consumer economics work.
And for that matter, I think it could make since to have trade schools for white colllar jobs too. In some sense that is what coding camps are, although I'd like to see them be a little more rigorous and include things like security, software design, algorithms, etc.
As for passion subjects and arts, maybe have more, and higher quality community classes available that people can go to when they already have a decent job and can pay for them outright instead of accruing massive debt.
Specifically, the government made it so college loans can't be discharged in bankruptcy, and backs many student loans.
The solution is to remove the exception for student debt in bankruptcy, and either have the government stop backing student loans, or make stricter requirements for colleges to quailify for its students qualifying for federal loans. Like say, require that a certain percentage of students graduate, and get jobs within a year of graduating, having reasonable tuition, etc.