LOL. I wish the government gave 0-interest loans. As it stands in the US, Stafford Loans are higher than most car loans [3.73% undergrad, 5.28% graduate, 6.28% PLUS]. Costs are skyrocketing despite government loans. It's not the working/middle class students asking for new buildings, new "centers of research", new dorms, etc. Colleges are building these things, giving you the bill, and your options are go:not go.

As the percentage goes lower the amount of debt will increase. The same thing happened in mortgages. The monthly payment stayed relative constant (plus inflation).

We're talking about teenagers, not adults with several years of household finance experience.

It doesn't matter. People care more about the monthly payment than they do the debt #. You can afford a much higher debt burden if the interest rate is smaller.

For fun, assume you can afford $1000/month in housing costs. With a 30yr mortgage and 20% interest rate. How expensive of a house can you afford? What if interst rates dropped to 10%? 5? 2.5?

Very strong correlation with home prices over the last 40 years.