Robert has done an admirable job of reviewing Collinge’s book, which does expose the — inevitable — games that the subsidized lenders played (“rent-seeking” in the jargon of economists) to maximize their profits. Very bad stuff, enough to lead a reasonable person to conclude that it was a mistake for the government ever to have gotten into the business of student lending at all. Not only a bad idea, but illegal as well. If someone had asked James Madison if the Constitution authorized Congress to set up any of its student-loan programs, he would have said something like, “I cannot lay my finger upon any provision authorizing such actions.”

Direct federal lending is no more constitutional than subsidizing private lending, and I can see no reason for believing that cost taxpayers any less. Nor is Collinge’s proposed solution of having the feds shovel money directly to colleges and universities so they won’t have to charge so much going to work. That subsidizes all students to (supposedly) make college affordable for those who can’t afford even the least expensive options.

What’s really called for here is private action. There are lenders that tie repayment to post-graduation income, and there are scholarship organizations that hunt for sharp-but-needy students and target financial help to them. We would today have a much more developed network of such voluntary student lending and aid operations if we had not taken the wrong path of federal intervention decades ago.