IMO, a large chunk of this would be resolved if federal loans where limited based on tuition not just need. If a school charges more than ~20k/year then students can't apply for federal loans and private loans become dischargeable.

Note: Some schools still charage less than 10k/year. http://www.usnews.com/education/best-colleges/the-short-list...

Instead, schools have a huge incentive to raise tuition endlessly and family's are stuck playing a zero sum reputation game.