If you want to have the market decide, the market has to be in play for the entire process. For example, the loan terms could vary based on the demand for the chosen degree. Or, the loan terms could vary based on the (salary?) success statistics for grads from that school in that degree program.

As it is now, there is no up front penalty for choosing a major at a school that is so expensive the student may be in financial bondage for a significant portion of their career.