Federal Loans have little (if any) impact on the cost of education. Federal Loans have a big impact on the Federal Budget and the students they give loans to. The rising cost of Education has everything to do with how Universities spend their money. Ten or so years ago, the University of Michigan had a 50 million dollar surplus in their budget. If they didn't spend that money, they'd not only have to turn it back over to the federal government, but the following year they would have had their money from the Feds cut by that amount. So instead of being allowed to be fiscally responsible and saving the Feds money that year, they had to spend the money (and they did - they built a new building in Ann Arbor that year) or else risk having a budget crisis the following year.
It's not the loans that cause the problem, its our broken ass system and the people that run it.
Fuck you Ron Paul and your ideological bullshit. Do what's right and fix what's broken, not what's easy. Your argument is as rotten as the "fix the voting laws to prevent fraud". It's all ideological horseshit wrapped in bacon.