Both seemed to have things confused. There is a difference between Student loans and grants. It seems what the (Questioner) meant was grants and not loans because obviously a loan has to be paid back and the grant does not. Seems "Liz" isn't so smart.
Also I agree that government involvement increases the cost considering that if a school receives federal money they must set tuition costs at or above what the government says to. This is why schools such as UT are sitting on billions and still raising tuition costs.
University of Texas Endowment Holds $1 Billion Gold, 5% Of Its Portfolio
http://www.forbes.com/sites/robertle...its-portfolio/