Anyone is eligible for federal loans. There are a few need based loans but the majority are available to all.
The real issue isn’t defaults per se - federal loans generate revenue for the federal government so taxpayer isn’t plaything anything - it’s that the loans haven’t made college more affordable, it just results in universities upping tuition and using the loan revenue to make large capital expenditures. That’s why college has got pricier than price of inflation for so long. Best thing to do is to impose cost controls on schools who want to receive federal aid funds.
The money is from US tax revenue
Then you are inviting federal control and bureaucracy into the school. Let the school compete for the students dollar without restriction. No govt mandates, and let parents and students decide if a school is worth the solicited cost. When schools see that people wont pay for crap classes or social programs, they will change or die.
The ONLY justifiable motivation for govt interest in education is to ensure we have a well enough educated work for to provide for our national defense needs (scientists, mathematicians, doctors, etc).