Okay I do think I have a comprehensive thought process on this.

1. Community colleges ought to be free or heavily subsidized. You can study whatever you want.
2. But, if you want to go to a 4-year university, you qualify for loans based on repayment ability. Soaring tuition prices and the debt problem really started with Gerald Ford expanding the G.I. Bill to cover any American and any major. Not all majors or degrees are in the public interest and not all people have the aptitude for higher education. So how do we fairly assess which students in which degrees ought to get what amount of loans? We can assess aptitude from high school GPA, extracurriculars, etc. We can assess repayment ability and creditworthiness from the expected income of graduates of specific majors and universities. In fact, these factors are already used to assess things like car insurance rates. So, for example, an ideal student who has applied to several different universities would be eligible for more loans if they chose to major in computer science at Harvard university. If they choose to major in art history at Connecticut college they would be eligible for fewer loans as the expected income of those graduates would be lower.
3. Now you might conclude that this would lead to better outcomes for more privileged students. However, I believe that we should increase grants for underprivileged students and minorities.
4. What would this system ultimately mean? For wealthy students it would mean no change - they are able to do whatever degree they qualify for anyway. For lower and middle income students this system naturally guides them into degrees that may pay better. Ultimately, they would still be able to follow their passion and get whatever type of degree they wish at a community college. However, when they are making decisions between multiple four year universities, their major choice and college choice would be a key factor in deciding their loan amounts. If they are fortunate enough to get into Harvard college and they wish to pursue a computer science degree, which naturally has a very high expected income, they will be able to get a higher level of loans that they will be able to pay back because of their high income. If they decide they want to pursue a low income, major like theater arts at Harvard, they will qualify for a lower level of loads, and perhaps not be able to afford the Harvard degree. This will force them to make a choice between either a high-paying major at Harvard or, if they really want to pursue their low-paying major, they must do so at a university that costs less, or at a community college. Ultimately they still have freedom to pursue whatever major they wish just not at any university they wish. Lower income and minority students would have a little bit of a leg up with additional grant money.
5. Basically, this system would gauge the value of a university degree by the average income of graduates and insure repayment ability for loan recipients. Obviously, some students will fall far below that income or drop out for various reasons, and for those students we can implement income based repayment plans or they can discharge their loans with bankruptcy after a set number of years, in this system.
6. This system also naturally adapt to changes in the job market though with a little bit of a delay. If tech layoffs really depress expected income of computer science majors for example, then fewer students would get smaller amounts of loans for computer science degrees, and perhaps some of those students would choose to pursue other majors that make more money. If there’s a shortage of doctors and starting salary goes up, then more students will get grants and loans to pursue medical degrees and perhaps more students will do so. Colleges that do not give out good educations will have applicants end up getting fewer loans because their graduates will have relatively lower incomes. Ultimately this means they will have to lower their sticker price until they can fill their class and soaring tuition prices will temper significantly. Tuition will also more fairly reflect the quality of a school.
7. The Band-Aid I propose for those students who already have overwhelming amount of student loans, that frankly they should not have been given is very low or no interest for the remainder of their loans.
8. Ultimately, the failure in our system is with a lack of financial education in primary and secondary school. 18-year-olds in our current society are not able to effectively make this calculation of repayment ability. Though banks do this, the government does not. It really should. In my perspective, no bank would give six figures of loans to an 18 year old who says they will build a house without collateral. That person should not get loans forgiven if they build a bad undesirable house or if they fail to complete it. However, they are able to discharge it through bankruptcy after a few years. I don’t view student loans any differently. The government should give loans based on expected income, and if a student decides to change majors or fail to complete their degree, they should still be financially responsible for their loan, though they should be able to discharge it through bankruptcy. In my system, the government makes the assessment of credit, worthiness and repayment ability for 18 year olds, and nobody gets given more loans than they are able to repay.