Most risky loans require collateral and have legal stipulations that have pretty onerous consequences if the money isn't repaid, so there is a lot risk of default in typical loans and in that case, the bank gets something, which is thought to be of higher value than the monetary outlay.

the typical loan given to a person of that age in America is... different from the sort of loan you or I might take out. It is guaranteed both by the government and the debtor. You can't get out of American student loans through bankruptcy.

Personally, I think this is incredibly destructive; Banks will loan money as 'student loans' to people they'd never think of giving similarly sized regular loans. People that obviously have little chance of paying the loan back.