Is this true for Europe also? is there a massive amount of recently qualified pilots out there that are on crap money and trying to pay off huge pilot training loans??
Yep. In its worst incarnation it is called pay to fly or P2F. Believe it or not you can go to a training provider called Eaglejet and buy a type rating on any jet you fancy (right up to 747/A340). They will sell you a type rating and any amount of hours you want to buy. Many fools are soon parted with their money and are then faced with the grim reality that there is very little job prospects for someone with little experience. Its a costly mistake.
is it common place that airlines are taking advantage of a pilots passion to be in the air and paying them in magic beans? (so to speak)..
Yep. All the time. Pilots are our own worst enemy though. We love to give out about our companies in the cockpit but then our colleagues will happily do deals with the company on the side and effectively screw themselves over eg: working on days off to get a weekend off to keep the schedule going.