Taking on the loans is the bad decision, in the case that the student is stuck with no career prospects and a mountain of debt.
> they are making the best decision they can possibly make
That is not true. Going to college is not the best decision for everyone. Many graduates are over-qualified for the jobs they end up taking. Many jobs that should not require a degree now can afford to filter applicants based on completing college, since so many more people are going.
Employers are basically using your years at school as a signal that you are a hard worker. Is that signal worth the time and cost?