I think federal and state funding should go directly to public universities (with strings on administrative overhead and tuition costs). Federally backed stude

I think federal and state funding should go directly to public universities (with strings on administrative overhead and tuition costs). Federally backed student loans might remain for partial coverage of private university, but otherwise, they do exactly what you say - allow tuition costs to rapidly increase. But the principle of universal low cost access and bulk financing of it what is the cost saver vs trying to apply consumer product market models where transactions few and in most cases once in a lifetime per consumer. Tuition increases because the consumer product model of giving loans can't regulate prices in the market with that kind of transaction structure. Edit: Worse, as I mentioned in another comment, it's an industry that gets a detailed map of your finances before issuing a price for the services. That's no kind of market.