GAO: Correlation Between Rising Student Loans and Higher College Costs 'Difficult to Discern'

February 21, 2014 - 5:24 PM

student, college

(AP image.)

( -- Federal student loan limits and college prices have increased over time, but in a report to determine whether increases in federal student loan limits create an incentive for colleges to charge students more, the Government Accountability Office (GAO) found the correlation “difficult to discern.”

“Although increasing federal loan limits would give students more resources to pay for college, there is also concern that the availability of this additional resource might present an incentive for colleges to charge students more,” the GAO report states.

“The Ensuring Continued Access to Student Loans Act of 2008 mandated GAO to conduct a series of reports over 5 years assessing the impact of loan limit increases on tuition and other expenses and on private loan borrowing.”

Federal Student Loan Limits and College Costs Increase Over Time, GAO Says Correlation ‘Difficult to Discern’

(Chart: Ali Meyer/

The February 2014 report is entitled, Federal Student Loans: Impact of Loan Limit Increases on College Prices is Difficult to Discern, and can be viewed here.

The data in the report show that Federal Stafford Loans increased from 55,573,000,000 in academic year 2006-07 to 89,607,000,000 in academic year 2011-12, an increase of 61.2% over 5 years.

The amount of tuition and fees for college in the same time period shows an increase as well for public 2-year, public 4-year and private nonprofit 4-year institutions. The only institution that did not show an increase for all years was the for-profit 2- and 4-year institutions. (pg10)

Federal Student Loan Limits and College Costs Increase Over Time, GAO Says Correlation ‘Difficult to Discern’

(AP Photo)

“For more than a decade, college prices have been rising consistently across most types of institutions of higher education and continued to rise after the Stafford loan limits increased, but it is difficult to establish if a direct relationship exists,” the report states. “The tuition and required fees that a typical student would incur rose at an average annual rate of about 2% to 5% from academic years 2007-08 through 2011-12, following a decade-long trend of steady, consistent increases.”

“Although college prices went up, we were unable to determine whether or not these increases resulted from the loan limit increases because of the interference of various economic factors occurring around the same time these loan limit increases went into effect,” reads the report.