Students Loan Debt Problem: Is the Private Industry At Fault?

Today I argued with someone (I will leave unnamed) that getting the government out of making student loans will solve the student loan-debt problem.
They told me that the private lenders (non-government) are actually the biggest part of this problem.  This is dead wrong.
The private industry is in the student-loan business to make a profit.  So in order to make a profit they realize they must be careful in evaluating the circumstances that they provide a loan.  Otherwise they have the buwill lose money and eventually go under if they make enough poor decisions.  Thus the private industry evaluates each client on what major they are taking, how much income they are likely to make, and carefully evaluate to see if making the loan makes sense.
On the other hand the government has no logical motivation to stop them from giving anyone a loan.  The government tends to loan regardless of whether the student can feasibly pay the loan back or not.  The government does not worry if the loan will make them "lose" in the end because they can simply print the money or tax the tax payers to make up the shortfall.
So the gov't hands out loans to students who are Psychology and Kinesiology majors even if there are little to no jobs out there for those majors.  And what's happening? The students are stuck holding the bag.  That's not to say Psych and Kinesiology majors aren't smart people; it's that the gov't is willing to give the loan whereas the free market may be unwilling to give the loan based on their careful evaluation and realization that the loan is unlikely to realize a job for the student.