What would the alternative be? Require all students to pay their own way, thereby disincentivizing parents to work hard and save for their children's college education?
On the other hand, there are a lot of intangible benefits to be had by paying your own way through college; benefits that will never be recognized by those born with a silver spoon in their mouths.
In other words, I don't see this as a fundamental problem. It's just the way it is.