By introducing market forces on the lender's side we are side-stepping educating high school students and their parents about the returns on education and instead making the lenders be the bad cop who says "no, you're not walking out with $200k debt and an art history degree".
This should, in theory, reduce demand for university degrees in preference of community college or trade school certification, a system that has shown its merits in Deutschland.
It may also be useful for schools to own a portion of the credit risk of its students. The stick approach to this would be having schools buy a tranche of the loans each semester. The carrot would be the lender offering the school a small payment each year after graduation that the loan is paid on time, or alternatively, a larger payment if the loan hasn't defaulted in 6 and 10 years.
