Yes, you've hit the crux of the issue. The money lended has essentially no risk to the lender (assuming the US govt doesn't collapse). And schools can charge as

Yes, you've hit the crux of the issue. The money lended has essentially no risk to the lender (assuming the US govt doesn't collapse). And schools can charge as much as they want. So since loans are riskless, anyone can get one, so schools just charge a bunch because, why not, why not have seventeen overpaid deans and a new recreation facility? The people who lose are the borrowers.