The government subsidizing college educations causes the price of education to increase.
Whether you pay it back in 2 years or 20 years, the price is higher.
You also pay for it later, when you become a working taxpayer.
BTW government run healthcare is still an economic issue. The only difference is that there's one choice and it's compulsory.
In the Netherlands the government subsidizes universities per student they take on, provides a monthly stipend to students (from about $400 to $800 depending on whether your parents income, with the possibility to borrow more) and sets yearly home-student tuition-fees (at $2200). And still Dutch universities perform quite well in the world-rankings (all 14 roughly between spot 40 and 200).
Admittedly this is made easier by the fact that the Netherlands does not have any private universities (of any fame and influence), and the fact that things have been organized like this for a long time now...
After having spent 5 years in university, having a debt of even $40.000 is considered a lot here.
The simple solution is to stop subsidizing loans to any student for any degree.
People like to believe basic economic principles like supply and demand don't apply to things like education or healthcare, even when the evidence stares them in the face. (See millions of unemployable liberal arts graduates and the voracious demand for computer science majors.)
re student loan default data, this is very difficult to determine. First, many subsidized loans are being deferred, and thus not counted as "in default", even though they are not being repaid. The only data I can find quickly on the web only goes through 2009, which is obviously going to be dramatically lower than the default rate today.
Don't even get me started on the diamond thing. "Two monthly salaries". Good job De Beers (and Harvard/Yale/Vassar).
That and an incredible marketing push akin to how diamonds were marketed, as in you have to have a degree/diamond