When people ask me, “What is the worst thing the federal government has done regarding higher education,” I say it is a close call between two policy blunders: its entering the student loan business for college students, and the creation of the U.S. Department of Education (ED). But if forced to choose, I would say the student loan program is the greater evil; it’s the best example demonstrating the law of unintended consequences. The evidence is pretty clear that the program increased the cost of college, is a major indirect cause of the rise in administrative bloat that is both costly and diverted schools from their primary mission, indirectly reduced academic rigor and excellence, and, ironically, reduced access to college for low-income persons.

The House Committee on Education & the Workforce, chaired by Rep. Tim Walberg, has shown serious interest in reforming the system. Ideally, the government would get out of the loan business. Private businesses and entrepreneurs would make loans and maybe even other financial arrangements, such as income share agreements. They want to put limits on the number of years of college for which one can receive loans, and reduce individuals borrowing large six-digit sums of money to just those pursuing high-paying professional degrees. They want colleges to share in the burden arising when students default on their loans—schools should have “skin in the game,” which the Trump ED seems to support as well.  (All of these things and more are things I advocate for in my new book Let Colleges Fail: The Power of Creative Destruction in Higher Education.)

In a nation where the rule of law is of transcendental importance, I have been uneasy as of late at the Trump Administration’s aggressive use of executive orders and administrative rulings to alter public policy, even when I agree with the policy. But some recently announced administration policies regarding student financial assistance are highly welcomed because they try to undo some of the damage caused during the Biden years.

[RELATED: A Private Student Loan System Should Not Mirror the Federal Family Education Loan Program]

We learn, for example, that the Feds will start putting some pressure on individuals who have simply ignored their loans, knowing the government was unlikely to collect overdue funds aggressively. A recent TransUnion research report says over 20 percent of student borrowers are “seriously delinquent” or 90-plus days overdue on their loans. People are starting to realize that their credit scores will sink unless they start making payments; that their ability to buy a car or house will be imperiled by their failure to repay student debt. The financial damage from mounting federal student loan debt is compounded by a broader attack on property rights and the rule of law by letting millions of Americans believe that debt obligations are something that can be ignored. Property rights and the rule of law have been degraded in an attempt to win votes from indebted former students.

There are some major equity arguments against the federal student assistance programs that seldom get articulated. Most Americans do not have college degrees; on average, they tend to have lower incomes than college graduates. Yet we make federal loans to those “investing” in a college education, trying to get a piece of paper, a diploma usually connoting at least a modicum of intelligence, knowledge, personal discipline, and integrity. At the same time, however, we do not offer such opportunities to young people who want to open an auto body or coffee shop—they have to go to the bank or other financial institutions for assistance. Why do we support students getting degrees in gender studies that likely will yield little economic benefit when we won’t help hard-working individuals wanting to help people get their cars fixed or provide them with needed coffee and donuts to begin the day?

Injustice builds upon fiscal irresponsibility. Our federal government is borrowing unsustainable amounts during a period of relatively high employment and prosperity. A future generation of Americans will face the burden of meeting huge federal debts, endangering our nation’s seldom-recognized advantage of having the world’s most trusted currency and highest-quality government bonds. Why should we increase the national debt with a student loan program that’s racked up nearly two trillion dollars in unpaid obligations? Isn’t it immoral to imperil our children’s futures just to maintain these costly student programs?

For more on student loans, go here.

Cover image created by Jared Gould using Grok’s AI image generator, inspired by the cover art for Richard Vedder’s article, Eliminate or Radically Restructure Federal Student Loans, published by the James G. Martin Center for Academic Renewal.