This would save young Americans from going into crippling debt, but it would also make a university degree completely unaffordable for most. However, in the age of the Internet, that doesn't mean they couldn't get an education.
Consider the long term impact of this. There are a lot of different ways such a situation could go, for better and for worse.
Given the other massive catastrophic defects in the fabric of our society, making student loans illegal makes about as much sense as outlawing flat tires. The law you'll probably write isn't going to punish the people who need to be punished, and it won't help the people you're trying to help.