Funding the student loans system in England is expected to cost the government an extra £10bn a year, according to economists.
Higher interest rates over the past two years are behind the higher costs, the Institute for Fiscal Studies said.
It added the government could expect to make a loss on all student loans, regardless of whether they were repaid in full or not.
The Treasury said it had kept tuition fees frozen to deliver for students.
The system is problematic for the government because interest rates on student loans are pegged to the Retail Price Index (RPI) measure of inflation, which is currently at 5.3%, but the rate government has to pay on its debt is set to rise above that.
The IFS said until interest rates started rising the government's borrowing costs were lower than the rates it charged on student loans, so it made a profit when they were repaid.
But as inflation has risen government costs have also gone up, and how it borrows its money, in the form of bonds, has meant it has become more expensive to finance the student loan system.
