He's 21 years of age and has never really had a long run of games in the first team. Even the most highly rated youngsters (see Tex and Lingard) need time to adjust to the pace and physicality of this division. Whilst you are correct that at the moment he isn't good enough to make the team, in the long term he could develop into a very decent player.
I just have the feeling that the manager ha assessed him and that this loan is a shop window loan. Contrast that with Solly March. Who wasn't really playing that well but the manager persisted with him and has kept him in and around the squad and given him every opportunity to improve at the club.
If he was 18 or 19 and sent out on loan I would agree but at 21 he should be looking to be kept within the ranks of the first team if he really does have a long term future at the club. I could be wrong and you could be right. Time will tell and CH will be monitoring him but I am seeing similarities with him and Jacob Butterfield under CH. Great potential but never quite fulfilling it and eventually moved on