should only be allowed to take them out for tuition and books.

My wife and I are in a position where we will be debt free in less than a year by age 28 with 2 associate degrees, 2 bachelor degrees, and a masters degree. We worked through school, took out loans only when needed, and the amount we borrowed was enough to only cover tuition and books. All of our education was done at universities with no subsidies or tuition breaks. We earned only a few smaller scholarships.

I know of friends and family who took out loans for vacations or trips, and they even used them to pay their living expenses. The only time I can see that being used for living expenses is for graduate school while in programs that require you to have no job and do be doing internships and/or fellowships. Taking out loans outside of tuition and books for undergraduate work isn't necessary.