"More people can be more educated. It's wonderful." ~ Alice

An unwarranted assumption.

First, it's the colleges and universities that do the education. Last time I heard they were pretty much fully utilized. We need to build more. Changing the student funding scheme does not fix the problem.

Second, somebody will have to do the paperwork. If the private lenders are elominated the colleges and universities will have to do it. Or the government will have to hire a number of people, perhaps the same size workforce as the private sector had.