Allowing students to take on more debt has just resulted in tuition inflation.
The government guaranteeing the loans just means the lenders have no risk, and no incentive to make sure the loan can be repaid.
Basically, it's a great deal for the lenders and the universities, but a crappy deal for the students. Student's take on the loans, considering it "good debt" and under the belief that they can get out from under the debt if necessary. Then reality kicks in and they see that it will destroy their credit rating, and that the government will come after them if they default.