In response to WhatDoYouWantNow's comment:
I really don't see the need for this.
First, the government should at least try to make enough back that it can eat losses from default without passing the cost on to the taxpayer.
Second, the problem is more the cost of tuition and not the interest on the loan. I'd like to hear from them exactly how many people are choosing not to go to school because of a possible 3.9 vs. 0.75 interest rate.
Third, the more easily available loan money is, the more free universities feel to jack up tuition. These loans are funding fancy campuses, not necessarily quality of education.
Fourth, simple reality is that not everyone can afford to go to an expensive private university, and frankly, what you put into your studies matters far more than where you conduct them. The main advantage to top schools is name recognition amongst employers who are impressed by names rather than performance.
One other item you can add to the list is collusion. Perhaps not deliberate but defacto. Compare tuition and fees at Ivy League schools. Virtually the same.