Good government should always take account of human nature: one aspect of human nature is that you are more careful about conserving resources when you are dealing with your own property. Any child knows that if he breaks his toy by being reckless, he had better not be reckless. But what if the parent always replaces a broken toy for the child? The child will never learn to take care of his belongings. The child will be exploiting what economists call a “moral hazard.”

A major moral hazard today is student loans. As we’ve written many times, subsidizing student loans is bad policy. Federal money flowing into this area allows more students to borrow more money to go to schools they might not otherwise attend. And this gets us into our current crisis, with over $1.2 trillion in outstanding student loan debt.

Rational policy in this area would help eliminate moral hazards by placing risk on the shoulders of those who engage in risky behaviors. Students who borrow money for college shouldn’t be bailed out–bailouts only encourage additional bad behavior by future students.

Colleges that provide poor education shouldn’t be protected by a captive market of students with federally provided cash – if you can’t provide an education in an open market, you shouldn’t be propped up by the feds. Finally, lenders shouldn’t be protected from their capitalizing on federal largesse –lenders that make bad decisions should face losses when bills aren’t getting paid.

Fixing all of these moral hazards is a good idea, but none of them can occur in isolation, and they can’t be fixed retrospectively. For example, clawing back federal funds from universities whose graduates fare poorly shouldn’t be the responsibility of the federal government: policy changes should be forward looking. And allowing current borrowers to discharge their student loans in bankruptcy is rewarding past bad behavior.

There’s no doubt that excessive student loan debt is a drag on our economy. And there’s also no doubt that it is largely caused by federal money and regulations pushing up the cost of college. But there is no easy silver bullet to immediately fix this massive problem, and it is irresponsible to make promises we can’t keep.

Higher education in the United States has a long and celebrated history, pre-dating federal spending and the numerous programs and requirements under the Higher Education Act. In order to increase access and affordability of higher education, policymakers should limit federal intervention, programs, and spending. And in order to truly drive down college costs and improve access for students, policymakers should undertake major reforms to accreditation.