Excellent questions, and I have no answers or well thought out opinions as of yet.
Huge, huge, huge subject, and not one I think we can address in anything approaching depth unless we start talking about some of the other problems with student loans - the fact that easy access to loans is undeniably helping support a college degree's inflation rate of more than double that of the broad economy, the fact that student loans are bankrupcy-remote yet still priced to reflect a risk premium, the fact that there's no proper "market" for student loans, and the borrower's expected long term earnings have zero impact on the rate, etc. In short, it's kind of a messy situation to begin with.
But, let's ignore all that. Your question makes two suppositions that I'd like to question - one, that education is a means to a job and not a worthwhile path on its own, and two, that one of the purposes of human life is to ensure that we die with positive net assets.
If your two friends spend the rest of their lives in school, and die without paying theirt student loans, are either of those necessarily the end of the world? Or, more simply, what's wrong with staying in school your whole life?
The one with three master's degrees is in good health and can possibly recover that debt and come out of it paid off and with positive net assets at death. It's too hard to say on that one. Without too much mystery, the term that people use for him is "smart" and of that I have no doubt. Also while they were out busting their butt getting all that advanced education, it was never really a case of a "lazy" person avoiding the hard work of the real world. They could have just as easily couch surfed but drank beer and got stoned. Instead, they couch surfed (read: never paid rent), and got three master's degrees, and from pretty good schools like Golden Gate University and Middlebury Graduate School who have reputations for being pretty hard. That person put the massive hours in to get all that education and by itself, even without work, is an amazing and major life accomplishment. That being said, every year I go to the air/car show and there's this booth where they have a prize for the biggest transformation of the most rusted out piece of junk being transformed into a one of a kind showpiece. People put in up to 20,000 man hours (but minimally 1,000-2,000 hours each) on one vehicle and I have seen hot tubs put into pickup trucks with fancy tile, gold plated parts, and lots of velvet. I think in that case, I would rather spend 20,000 hours on lots of advanced education.
I can't really judge on that one and say for sure they are planning on ditching the debt.
But on the other person,
with the six master's degrees and doctorate and counting, and their obvious serious health problems, there's no doubt that they are "planning" on dying leaving a quarter of a million dollars in debt from bank loans, student loans, and credit cards. While the first person mentioned is considered smart and the smartest person in the room, this other person is a true renaissance person/lady. But I can only imagine what the cost of her education been had the military not have paid 80% percent, but things add up when it's within the annual rising cost of graduate school tuition with a few baby Ivies thrown in the resume for good measure. But if we look at the more than million dollars to educate this person on Uncle Sam's dime, it's also not a small bill that this former, decorated military officer also had fixed wing and helicopter training which had to, under the way the military spends money, be another million dollar bill. Gosh, I have the most respect for this person, and even considered asking her out way back when, but it does bother me that anyone would want to purposefully add to debt they have no intention to pay off.
To answer your question, end of the world?
No, and probably forgettable on the big scheme of things. Uncle Sam spends money in a much, much worse way to where the issues I brought up are insignificant:
Also the bolt was not cheap, but the nut was a mere $2,800 dollars. Go figure.