Yourself and shamans seem to have done the good thing for yourselves, took the loans and are on track to pay them off. But think that given the incentives (cost of loan and time vs. higher wages in the future) you both made good decisions regarding where and what to study. In the same incentive structure, a lot of kids are making bad decisions, piling up much more than 30k debt to go to a more expensive school but to get less marketable degrees. If you make it so that college is free, can you imagine how many kids will go study these useless degrees, spend 4 years of their lives and the state's money?
"Societies that have higher average education rates tend to be happier and more productive". Absolutely, long-term this is the main thing a society can do to be developed. Plus democratic government and good infrastructure, this is the path to further development. But this higher education has to be productive. The world can use english literature and art history majors, but only so many. It can use a lot more engineers, nurses, doctors, or even welders, electricians, etc. If free college leads to an imbalance of the makeup of specialties in society, it won't be the expected outcome of "higher average education".