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There are economic hazards here. If the loan has interest below the market rate, then the students provide a vehicle for the transfer of money from the state to the (possibly for-profit) university.

Education is an investment in society only if it benefits the student. Looking at a default rate of around 45% for students who did not receive any degree at all and also for students who received some kind of certificate (cosmetology school), I would guess the students are not repaying because they gained no benefit from the "education".

There needs to be some mechanism to ensure that education loan subsidies benefit society and not just some institutions.

There are problems all around. E.g., state laws governing cosmetology certification that require hundreds of hours of training.