Federal student loans began in the late 1950s after Sputnik, when the United States wanted to compete in the Space Race with Russia/USSR. We wanted to get more Iowa farm boys a college education.
Private student loans do exist, but private entities are understandably reluctant to lend to 18 year olds with no job. That can be solved with parent co-signers, but many US parents aren’t in great financial shape either (no guarantee of repayment). So for decades there were federal FFEL loans—private loans, sort of, but the federal government guaranteed them in the event of default. And subsidized them. Since 2010 all federal student loans have been directly issued and managed by the federal government. No new FFEL loans were disbursed.
One solution is to have universities have more skin in the game, or loans tied to certain more useful degrees only. Like STEM perhaps. BS degrees, not BAs.
Agree about the GI Bill and equivalents.
Federal student loans are a huge problem. They serve to increase tuition horrendously, mostly.