Call for a Year of Jubilee, forgive all debt, then start over. :)
We have bankruptcy (in Australia)- it is based on the Jubilee concept. Here your debts are forgiven after 3 years if you go bankrupt (used to be 7) but don’t expect anyone to jump at giving you another loan in a hurry. Why should they? Trouble is people want there debt forgiven and still live the high flyin lifestyle that their study bought them. The Jubilee concept was a do-over thing and was for people who were flat out poor and unable to pay their debt.
I am unsure how your system is financed but our student loans are paid back through the tax system - once you have completed your study and earn over a certain amount the tax man cometh and taketh a percentage. There is no interest charged as far as I know. It seems to work ok.
Mel