I had to pay first 15% from my account, they would pay the remaining 85%. Every semester, once I showed a receipt that I paid 15% to the university, that bank would wire the remaining 85% directly to that University.
What did this do to my decision making? I literally only chose universities for which I could afford the upfront 15% and the max of $30k. I chose this university even though I had admit from other universities which had higher tuition.
What impact does it have on universities? Universities with higher tuition start seeing a decline in enrollments. I got out with a max $30k debt, of which I paid 15% out of pocket already, per semester.
I could've dropped out of school and joined again a few years later but that loan would still be available to me for 7 years.
The problem is that government subsidizes loans. It doesn't do something like capped match. The government should just say, "We will cover your need-based education burden up to $20,000".
Something like this would make most state schools accessible to most kids and yet, put a big limitation on how much schools can raise tuition. Some schools will raise it up to 40k, others will keep it at 20k, both will try to maximize intake for their tuition.
Simply handing out unbounded, undischargeable loans is just crazy!