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The government also made huge student loans widely available. So government tried to narrow the wealth gap. In response, colleges just raised their prices, and students were forced to take out bigger and bigger loans.
Yep. You hand out tens to hundreds of thousands of dollars to people who haven't yet had to balance a bank account and it's going to get spent en-mass. Why go to a trade school or a community college when you can go to [insert most expensive school that accepted you]?
A potential solution here is to cap the maximum amount of loan that is immune to bankruptcy discharge. This will have the effect of depressing the total amount of loans an average student has access to and force colleges to follow suit if they want to see continued enrollment.
I agree in principle, but I think that would do the opposite in practice. It would just elevate those whose families have the means to go above the maximum loan amount. So if tuition is X, they would still reach saturation if they charged X + $10k, or whatever. So the less fortunate wouldn't have the opportunity to get a good education again, the bar would just be higher.
What they really need to do is either nationalize college education (extremely controversial), or put requirements on maximum tuition as a prereq to the loan. I.E., a school is disqualified from federal loans entirely unless tuition is under X, even if the maximum loan is X - 10k