I would very much like to get rid of federal funding for schools, and allow private student loan with the possibility of purging the borrowed money through bankruptcy procedures. I am not sure if such proposal is realistic.
Solution, don't lend money. Sell education in exchange for a promise to pay x% of salary for y years. Students won't go unemployed just to avoid paying it back and it aligns incentives. If colleges want to make lots of money, they will have to make sure their students get good jobs upon graduation.
