Are we talking about the US?
I think its probably true that we're producing too many young adults with high amounts of student debt for the economy in its current shape to support. That's a complex issue that touches on the workforce as a whole, the state of K-12 education, the loss of the manufacturing sector and others to outsourcing, and other things.
On the K-12 part of the equation, I believe there's been a handful of problems there -- First is basic reading literacy, second is the trend of standardized testing and the ways that has come to shape school curriculum for the worse, third is scientific literacy (STEM), fourth is the utter concentration of education to produce college entrants rather than capable young-adults/workers, and fifth -- related to the last and second -- is the gutting of art, music, and vocational education opportunities. On the last point, I think its a critical failure of K-12 education to not recognize or value those who aren't college-bound or entering a traditional career-field -- it used to be that high schools prepared individuals to enter into vocational apprentice-ships as plumbers, builders, mechanics -- and while I would tend to agree that those fields don't necessarily make for a comfortable life -- there will always be a local need for those services that can't be outsourced. Likewise in the arts -- some people are simply painters and dancers -- far be it from us to tell them otherwise -- yet our K-12 system gives them no quarter. Likewise, for those on a path to entrepreneurship. I value the college education I have, it gives me a comfortable life, debt-and-all, but I think it does us all a disservice to effectively make it a requirement for everyone. At the same time, I also believe that the reliance on college to be the final source of education in some ways has allowed K-12 to be so staggeringly ineffective -- they can fail and pass the buck onto colleges; when a high-school graduate can't find work, its no longer because they were failed by K-12, its because of their personal failure to go to college.
As a secondary backdrop to what I think about K-12 and how it relates to this, I also believe strongly that kids are far more capable of what we ask them to do, and we get such poor results because we're asking them to grow in the wrong way -- its not always apples-to-apples to compare to other countries, but its interesting how much lip service we pay to K-12 education despite our poor results, and even more interesting when you realize that many of the countries outperforming us on reading and STEM literacy are doing it while spending less, assigning less homework, and many of them having more vacations, shorter school years, and shorter school days. Yes, you hear a lot about Japan's education culture and their cram-schools running late into the evening, but on the opposite end of the spectrum you have Sweden (I think, or maybe Finland) which operates as I describe.
Why is it this way? The basic problem is that the American system is essentially an industrial version of education. We try to turn out students shaped like cogs, ready-fit for the college machine. When standards aren't being met, we introduce *more process* and *less care* -- like so many maligned middle-managers. We're so focused on feeding the machine, that the adults in charge can't recognize and don't value those that would be instrumental in different and possibly new machines -- Instead, they're discouraged and malnourished from growing into full form, so that they can better fit into the approved machines. The result if an over-abundance of young adults with very little in the way of discernible skills, let along distinguishing ones, and a stark lack of real confidence to do their own thing. When I was in K-12, only the exceedingly bright students -- those smart enough to challenge an adult on intellect -- were ever given any real special opportunities as far as education goes. In high-school this changes a bit, where a reasonably bright student to elect to take college-level courses for credit, but even those were not especially challenging. In my senior year I even repeated one of those college math classes *voluntarily* because there was nothing else worthwhile to take, and my school, because of the state, wouldn't let me take any more study hall, TA-gigs, or independent study hours. K-12 as it is produces minimal quality goods en mass, that is their focus -- and as they succeed at hitting that incredibly low bar, we should find it unsurprising that it leads to the kind of "bubble" OP describes.