There's good and bad to everything and every policy, but this statement is meaningless. How many people have been educated in government-owned colleges, which includes ever public university in the U.S.? Whatever the unintended consequences, it seems to have done an enormous amount of good.
They created artificial demand - for housing and for higher edu - and as we all know that drives prices up.
I hope this clears things up.
The point is, when you squeeze a balloon...shit happens.
That doesn't make it a perfect policy, of course. I think grants to students or simply free education at public universities may be the best options. But that costs more money than loans.
On this specific point: I have yet to see much consensus in research that the loans drove up the cost of college; last I knew there was one paper. AFAIK, it's a story started by the partisan 'shrink-goverment-at-all-costs' crowd, and the repeated.
Demand drives up price.
Loans also increased the price the market can bear.
A study for Ecom 101 just feels like more gov excess.