CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

Study: Link Between Loans and Tuition Is Murky

02/20/2014

Inside Higher Ed.  Feb 19, 2014.

Congressional investigators said in a report Tuesday that they could not determine whether students' increased access to federal loans in recent years has caused college prices to rise.

The Government Accountability Office was tasked with analyzing what, if any, impact higher federal loan limits that took effect in 2008 and 2009 have had on the rising price of college. In its report, the GAO concludes that "it  is difficult to determine if a direct relationship exists between increases in college prices and the [federal] loan limit increases because of the confluence of many other factors that occurred around the time the loan limit increases took effect," such as the economic recession and increases in other types of federal, state and institutional aid available to students.

The report also notes that the increased federal loan limits were correlated with a drastic drop, by more than 50 percent, in private student lending. A variety of factors explain that drop, the report says, including more stringent lending criteria, new consumer protections on private loans, and colleges' efforts to steer students away from private loans.