One solution I've been thinking of is that maybe there needs to be some kind of state-provided minimum life. Almost like opt in communism.
If you opt in then you get an 8h/day job automatically. Doesn't matter if you don't have any skills at all. The job will be guaranteed safe and non-humiliating (no sex work and if you are a vegetarian you don't have to work as a butcher etc). In exchange you get enough food, clothes and shelter to provide for yourself and children (assuming two incomes), entertainment (exchangable for cash equivalent), pension, health insurance, upskill opportunities, and some money on top. If you have negative net worth when enterring the program, your loans will gradually decrease (this could be done as some combination of the state paying them off for you and the loan giver being stiffed).
You can opt out at any time you want.