It's a free market -- tuition keeps going up because you, your neighbors, and every other American, is willing to pay for it. Prices will keep going up until people are so strained that they're not willing or able to pay anymore.
But it's not a free market. It's a market artificially inflated by the government via Federal loans, guaranteed pay back to the banks, and debt that's non-dismissable via bankruptcy. Those may or may not better than the alternative, but they sure as hell mean it's not a free market.
Not as of June 30, 2010: part of the Patient Protection and Affordable Care Act AKA Obamacare was using the profits from those student loans to fund it, the government is originating all "guaranteed" loans after that date.
The taxpayer savings don't fund Obamacare but rather go back into higher education:
"The Congressional Budget Office said the direct-lending approach would save taxpayers about $61 billion over 10 years. Roughly $40 billion of the savings will be redirected to higher education. Education programs will get an additional $10 billion from the health care package."
Doesn't change the fact that you are always free to go to a cheaper college, or avoid it altogether. Even the college is free to set its own prices. I don't agree that the notion of a "free"-er market would fix this.
The entire OP argument is that predicated on students essentially being lemmings and willingly / unwittingly taking on student loans to spend on college tuition. If we believe that college students are rational economic actors-- as we expect adults to be elsewhere in the economy-- this argument breaks down very quickly.
> tuition keeps going up because you, your neighbors, and every other American, is willing to pay for it
The parents of international students, primarily from Asia, are also willing to pay for it. The US has recently jumped all out onto this income stream (since 2008), and if you look at how things went in countries that have been doing it much longer, like Australia, you'll realize it'll be quite a while before Asian parents aren't willing and able to pay US college tuition for their children anymore.
