Don't borrow money for school...it can hurt you and those close to you...

[dfrecore]

a $5,500 grant has the same effect on tuition as a $5,500 loan.

Actually, it doesn't. Because not everyone qualifies for a grant (about 38% at public universities), so the number of students getting that money is fewer, and has less effect on the marketplace of tuition. If EVERYONE at a school has the opportunity to get a loan, then the school can raise their rates and tell people "just go get a loan." But if they aren't able to, then schools can't say that, so they don't. They lower their tuition to compete for students. It's actually how the marketplace works for many, many things in the world.

If you can't afford a new iPhone or Samsung Galaxy because it's too expensive, there are tons of options for less expensive phones. Over the last few years, demand for cheaper phone service has exploded, and companies responded to that demand. The cost of cell phone plans has come down, as the companies compete against each other for your business. I pay a whopping $25/mo for unlimited text, phone and 1G of data. I paid $80 just a couple of years ago!

Look at the car marketplace - not only is there a huge range of prices for new cars, but for those who can't afford/don't want new, there is a wide range of prices and places to buy used cars.

The easy money from the government has meant that schools can raise their prices unnecessarily, and because students can put off paying for it until after they're out of school, when it's too late to do anything about it, they have no effect on the pricing. If they had to pay for it up front, they would demand better pricing or go somewhere they could afford, and colleges would be FORCED by the marketplace to make their colleges affordable, or lose students.