The problem many people have here is that college is heavily subsidized, and those subsidies pretty much require us to get something for our money. I would be very surprised if the government's policy was "we will lend up to $200K to people with no assets and no prospects, which they can use to purchase art." And yet when those people borrow similar sums of money to purchase, say, a BA and MA in art history, it's fine.

That's a bad policy. If the university system didn't exist, and you tried to pitch the current version to Congress, you'd be ridiculed.