Sixth, intended partly to promote greater opportunities for the poor, these federal-aid programs have been accompanied both by rising income inequality in the United States, and a decline in the proportion of recent college graduates from poor families.

Proponents of federal student-loan programs argue that private student-loan markets are underdeveloped, that banks are afraid to lend to students, largely because of their lack of credit history. This argument is vastly overblown. It is amazing how students have no trouble getting credit cards and racking up debt, or little difficulty borrowing to buy a car. Why would college be any different?

Yes, the goal of providing educational opportunity for all seems commendable. Any revamping of the federal student-assistance program would have to be phased in to avoid severe hardship and enrollment disruptions. But here are some better policies:

• The federal government should get out of the student loan business.

•  It should provide educational vouchers (similar to Pell Grants) directly to students (not schools), and make those vouchers progressive (very low-income students receive the most, fairly low-income students a little and middle-and upper-income children nothing).

• Add performance incentives, rewarding timely degree completion and good performance.

• Remove the tuition tax credit that largely assists relatively affluent students and their families; perhaps use savings from all of the above to reduce the budget deficit.

• Eliminate the Free Application for Federal Student Aid form and require that applicants give the Internal Revenue Service permission to provide family-income data.

My guess is that the total number of students attending four-year programs would fall modestly, a good thing given the disconnect between the labor market and college enrollment; that the proportion of students from lower-income families would probably increase (also good) both because the Free Application for Federal Student Aid form is a barrier for lower-income families, and the burden of aid reductions would fall mainly on the colleges and more affluent students.

Also, the total cost to the federal government would drop significantly.

More radical solutions might involve rolling many government-income security programs into compulsory tax-sheltered 401(k)-like lifetime individual security and investment accounts, allowing withdrawals for college costs. However it is done, the current system needs replacing.

Richard Vedder is director of the Center for College Affordability and Productivity and teaches economics at Ohio University.