Education is broadly considered to be the best and surest way to improve one's lot in life. And access to some kind of education after high school is widely believed — with good justification — to be essential to success in our modern economy. That is why most Americans say that everyone deserves the chance to get a college education.
But many students, particularly the most disadvantaged, simply can't afford to pay for post-secondary education, especially after the dramatic rise in tuition in recent years. Well-intentioned policymakers have swooped in to break down these financial barriers, partly with grants but primarily through subsidized loans that can offer families far more resources at a fraction of the budgetary cost. With little underwriting, however — partly due to a philosophical commitment to access and choice, and partly to institutional lobbying — government lending enables millions of students and parents to bury themselves in debt for programs of dubious quality. It also weakens the natural forces of market discipline that would encourage schools to keep tuition in check.
These programs have proved extremely difficult to reform. A recent attempt in fall 2011 is revealing. In an effort to reduce defaults and keep families from taking on ruinous student-debt burdens, the Obama administration made a small tweak to the underwriting standards for a federal college-lending program known as parent PLUS. The program allows parents of a dependent undergraduate to borrow to help their child cover any unmet college expenses; the loans are often used to supplement funding beyond the dependent-student borrowing limit, which is far below the average annual cost to attend a public college.
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