The underlying issue is that the government should never have gotten involved with the student loan business. They should be like any other unsecured loan, and they should be dischargeable in bankruptcy. Whether the school backs the loans or a private bank doesn't make much difference.

What makes the most difference is that the cost of the loan (the interest rate) will go up. That means more students will not be able to afford college, which is a short term pain, but it also means the schools won't get the crazy level of funding. The schools would then have to compete for students, and a major area of competition will be cost. How do colleges cut down on costs? Eliminate all of the bullshit. Eliminate the beaurocrats, the college-provided health and mental health centers, the sports that aren't self funded, the college-owned dorms and food halls, etc. Privatize that shit so students can pay for that a la carte, or not.

Eventually bullshit gone, tuition costs drop, and the taxpayers are no longer involved.