Surely this can be mitigated by inserting clauses in the loan deal that protect the player, e.g. min number of minutes.
It can be in terms of curtailing the loan but not quickly enough to save a player from being wrecked.
An example: Ryan Kent was a really excellent prospect - he was lightning fast, tricky, could cross well, had a powerful shot, and in that sense represented (in retrospect of course) a good bit of youthful cover for Oxlaide-Chamberlain. He went out on loan to Barnsley and was brilliant - scoring some fine goals, lots of assists, and won the young player of the year award.
He returned to LFC, who gave him a new contract and sent him on loan to Freiberg as Klopp thought it would be a good place to further his development. The relevant clauses were inserted in the contract, Kent went there, the manager showed zero enthusiasm for him and after six appearances LFC called him back, and Inglethorpe and others were alarmed at how low he seemed - all of his confidence had gone.
So it was decided to send him off to another Barnsley-like team to recover. He went to Bristol City, same clauses again. The manager claimed he was a big fan. But he didn't suit the system, the fans (upon learning that he had to play a certain number of games) resented him and booed him, and his confidence remained at rock bottom. LFC again called him back early.
I still believe in his potential, but my god he's been destroyed in the past year.
Of course he needed to fight through it himself, but young players aren't robots, they can be good AND lose confidence. We've seen senior players suffer similarly, let alone kids.
And when you're off to Germany, while the agent pats himself on the back in Blighty, some 18 or 19 year old kid is stuck in a bedsit, alone, unable to speak the language and feeling an utter failure. That'll happen far too often. There's a major lack of care and concern among these agents who've started obsessing about this market.