I don't really think the government should be in the student loan business at all -- but if the government absolutely has to be in the student loan business, th

I don't really think the government should be in the student loan business at all -- but if the government absolutely has to be in the student loan business, then they have to be in the cost-control business as well. That's pretty much how Canadian higher education worked when I was an undergraduate in the mid-90s. There were no private universities, and the government set the university budget. It more or less worked. Canadian universities looked and still look a lot shabbier than their American counterparts, since not nearly as much is spent on facilities, but the education is fine. In America, perhaps the government could only give loans to students of universities who kept cost increases below the rate of inflation or met certain tuition targets. The best of the private universities would opt-out, and the rest would fall into line. Unfortunately, the American government doesn't have the will to do any meaningful cost-control, so this isn't going to happen.