That's not clear at all. Education fees have gone up, but it's not clear that the cause is student loans (and the subsequent increase in demand for education), and even if they did, we would expect at least some increase in education as a result of loans that allow more people to get an education. Should people who have the cash up front be expected not to compete?
But I think the main difference is a shift in jobs where higher education becomes a requirement, and this is not just because of competition among employees, but because the supply of jobs is changing. Low skill jobs are moving offshore or taken by (sometimes illegal) immigrants who can live more cheaply. In order to obtain the (higher) standard of living of today's America, people need to create more value which requires more skills. A perfect example is the IT industry. Company's like Google create huge amounts of value[0], and employees who contribute this are rewarded.
[0] no, not selling ads, but the service that people use in exchange for the micro-payment of viewing an ad.
The fact that students, most of whom have no assets and have never worked, and cannot prove their future earning potential, can get over $100k in loans that cannot be discharged in bankruptcy just by signing their name, has clearly caused massive distortions in the education market.
During the past few decades, the number of administrators in American universities has grown significantly, tuition has risen dramatically, and even public universities are investing in luxury amenities to attract student money, and raising tuition to pay for them.
The past few decades have also seen a proliferation of for-profit universities which are being investigated by the government for exploiting students by encouraging them to take out huge loans to pay tuition for programs without any value. They are taking advantage of flawed student aid policy by using the students to take money from the government.
None of these things have happened in any other wealthy country, even though those countries have also seen the same shift in the job market that the United States has. This is not a consequence of the changing job market, because if it was, it would have happened elsewhere. It is a consequence of policy choices.
The incentives for bad behavior are abundantly clear. In other developed countries, it is harder to get student loans, and easier to pay them back, and college is more accessible to poor students than it is in the United States. That's because public universities in other developed countries have caps on tuition, and students have caps on how much they can borrow, so universities can't use students as a vehicle for diverting government money to themselves.
But I think the main difference is a shift in jobs where higher education becomes a requirement, and this is not just because of competition among employees, but because the supply of jobs is changing. Low skill jobs are moving offshore or taken by (sometimes illegal) immigrants who can live more cheaply. In order to obtain the (higher) standard of living of today's America, people need to create more value which requires more skills. A perfect example is the IT industry. Company's like Google create huge amounts of value[0], and employees who contribute this are rewarded.
[0] no, not selling ads, but the service that people use in exchange for the micro-payment of viewing an ad.