Last Saturday, the Wall Street Journal ran an editorial on the legislation to get rid of the subsidized private student-loan program (not a bad idea) and ramp up the federal direct lending program (a lousy idea). In this letter, published in the Journal today, I offer the view that we’ve oversold college and ought to stop federal financing altogether:

Your editorial illuminates the folly of believing that taxpayers will ultimately save money with the Obama administration’s plan for a federal monopoly on college lending. Just like the president’s proposal to “reform” health care by making it subject to even more political control, this proposal takes us in exactly the wrong direction.
Federal housing policy, premised on the false idea that home ownership is good for nearly everyone, led to a vast number of mortgage defaults. Similarly, a federal college lending policy devoted to President Obama’s chimerical notion that the U.S. must have the highest percentage of college graduates in the world—the goal he announced last February—will lead to the educational equivalent of the housing bubble. That is to say, a large number of young Americans will wind up with college debt, perhaps college degrees, but no employment that comes close to paying enough to cover the costs. Stories like that are already common.
The truth is that we lure a large number of students into college who are academically weak and disengaged. Quite a few of them drop out, but quite a few manage to graduate—and then end up in rather mundane jobs that almost any high-school student could learn. Bureau of Labor Statistics data confirm that significant percentages of workers with college degrees are doing jobs that only call for on-the-job training.
College is a wise human capital investment for some, but we already have many young people in college who learn little and merely obtain a credential of scant value. That waste of resources will only increase under a federal student-loan monopoly. Instead, the government should withdraw from the business of financing education.
George C. Leef
Director of Research
Pope Center for Higher Education Policy
Raleigh, N.C.