I think it's as much of a problem of the "I want this, so I'll buy it" mentality, as the $5 latte is the poster child.
People think "MMMmm...that grande double mocha latte sounds good, so I'll buy it". They don't think of the compounding effect of not spending $5 on that coffee every day, just like they don't think of the compounding effect of any other purchase. Their brains live in a vacuum that can't connect the cause/effect of NOT consuming whatever, and instead saving that money to benefit their life in another area.
In the same way, I think the student loans is part of not having a plan to pay it back...but also just having the mindset of "Oh, Prestigious University, I want to go there, it sounds great!". Just like with that latte, they have a total disconnect between the cost of something, and the value/benefit of not consuming it. It's almost like they live in a world of expiring dollars, where if they don't buy that latte or pay the high tuition, the money will vanish, so there's no downfall to consuming it, and no benefit to not consuming it and delaying your gratification.
Those are good points. I think the best approach to this is putting the money away before you even see it. Then you are free to buy whatever you want.
Regarding the student loans, the parents need to take some responsibility too. Kids can't get those kinds of loans these days without a cosigner. IMO, that's a terrible thing to facilitate. I suspect the family had a high income (he was in sales) and lived in a HCOL area (NJ) and weren't eligible for a lot of financial aid. Still, lots of upper middle class kids go to state schools and they are starting to get better and better stat-wise, compared to when I went to college. Look how hard it is to get into Michigan, Wisconsin-Madison, UC-Berkeley, UNC, UVA etc. these days.