I agree with those who have said it's time to make your sister start taking responsibility for her own actions. Clearly your parents tried to get her to do it their way - paid her way through college, etc. - and that didn't work. Time to say "Okay, you're on your own, chickie." Love doesn't always look like love, but the most loving thing you can do now is to quit (I hate this word) enabling her.
I also think this is not the "end of the world" scenario it seems to be for your parents. My sister dropped out of college her sophomore year, and after struggling for a while in crappy jobs, she and her (also drop-out) husband are making shitloads of money (more than I am with a master's degree) at fairly decent jobs, living in a nice house, etc. It doesn't always turn out badly. She's just trying to find her own path, and sometimes that doesn't look like what you think it ought to look like.
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"If ten million people believe a foolish thing, it is still a foolish thing."
- Anatole France
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