Just to underscore OHMomof2’s point, here are the average debt levels and percentages of students who borrow at the 8 Ivy League universities–generally among the most important price-setters in U.S. higher education. They (and a few others) set their tuition and fees, and others follow.
Harvard: typical total debt at graduation for those who borrow $6,000; percent who borrow 3%
Princeton: typical total debt at graduation for those who borrow $6,815; percent who borrow 5%
Dartmouth: typical total debt at graduation for those who borrow $11,625, percent who borrow 25%
Cornell: typical total debt at graduation for those who borrow $12,000, percent who borrow 32%
Yale: typical total debt at graduation for those who borrow $12,000, percent who borrow 10%
Brown: typical total debt at graduation for those who borrow $16,000, percent who borrow 23%
Columbia: typical total debt at graduation for those who borrow $19,435, percent who borrow 27%
Penn: typical total debt at graduation for those who borrow $21,500, percent who borrow 23%
The availability of student loans is NOT driving tuition increases at these schools. Note that at every one of them, the typical borrower is well below the cap on total federal student loans to undergraduate borrowers (currently $31K). And the percentage of students who borrow ranges from minuscule to modest. The highest is Cornell at about 1 in 3, but the typical total debt there is just $12K, less than 5% of total 4-year COA of roughly $250K, and since only 1 in 3 borrow, that means well under 2% of COA is paid out of student loans. At Columbia and Penn the typical amount borrowed is higher, around $20K, or less than 12% of 4-year COA, but only about 1 in 4 borrow, so the total amount of 4-year COA paid out of student loans is less than 3%. At H, Y, and P, the total amount of COA paid out of student loans is vanishing small, some small fraction of 1%.
No doubt railing against federal student loans as the cause of “hyper-inflation” in college costs makes an appealing talking point for some ill-informed and ideologically driven radio loudmouth, but it just doesn’t square with reality. There is just no way that these colleges would raise tuition across the board in order to capture the tiny incremental increase in revenue they would receive from some percentage increase in the 2-3% of total revenue (or much less) they receive from federal student loans. Full-pays, who make up on average about 50% of the student body at Ivies, bear the brunt of those increases, and the incremental increase in revenue the colleges receive from full-pays when they raise tuition far outweighs the comparatively trivial amounts they receive from student loans. A far more plausible analysis is that demand for seats at these schools is so high, and there are so many well-qualified applicants willing and able to pay whatever price they ask, that they can afford to be relatively unrestrained in raising tuition It’s a superheated market for a luxury good, in which federal loans play almost no role. Bottom line, it’s the operation of free markets, not government subsidies, that drives tuition increases at elite U.S. colleges and universities.