I read this whole thread with interest as I actually do Exit Loan counseling for students that are close to graduation.
I wanted to point out a few things that were mentioned although I won't quote them because a lot was said.
Currently and for the last 5 years EVERY time(semester) a student takes out a student loan they must complete entrance counseling. This tool walks students through what their current loan balance is, how taking out additional loans will impact them, current interest rates, etc. Student must read through the information and fill in the blanks to advance to the next screen.
Having watched students fill this out, most (not all) are not considering the implications of the entrance counseling and what it is trying to tell them, it is another item to be checked off the to do list.
Second I am not sure when this began but currently the government only provides loans to parents if their credit checks out. Are their standards and metrics those of a mortgage lender or financial institution, I can't really say but they don't lend to people who are risky. The woman in the article may have received Parent loans before this was put into place, or their lending metrics are low and she was considered eligible.
Currently you must pay taxes on any loan forgiveness received by the government. Just like debt write off it is viewed as a gift for the year in which the loans are forgiven (although not necessarily taxed the way "gifts" are)
Last there are two things happening here which the article does not discuss, we have government programs and non-profits all PUSHING students to go into some form of higher education, typically four year. We are selling students on this idea and telling them don't worry about it there is financial assistance (you can see this for yourself here:
http://youcango.collegeboard.org/?navid=bf-ycg ) but there is no real discussion about the true impact of what "assistance" could mean.
Have hope though because many students are concerned with student debt, they do not want to take out student loans and many are trying to figure out how to pay them off early (this could be a small subset that I see as I am charged with helping students become educated about repayment and long term financial impact). There will always be people who will stick their head in the sand and those are generally who these news stories seem to find. As someone commented earlier only 1.8% have a high balance because of poor choices (and occasionally really crappy luck, but those are far and few in between).