In a case of liberal effrontery punctuated by bad economics, Roscoe Barnes, on behalf of the Public Opinion editorial board, laments the rising costs of higher education and argues that expanding the scope of government is the best way to fix the problem ["Lessen sting of tuition increases," editorial, July 21].

Never mind the fact that college education remains one of the finest investments a young person can make. The median cost of attending college for four years is just over $80,000 at private schools and $20,000 at public ones. The average return, during a lifetime, of earning a bachelor's degree over a high school diploma is approximately $1.3 million.

And never mind the fact that, by any objective standard, college students are already exceptionally well-funded. In inflation-adjusted dollars, federal grant aid has increased by $8 billion over the past decade, while loans provided by colleges have risen by $11 billion. In addition, state grant aid for students is up 78 percent over the last ten years.

No, the real shortcoming of Mr. Barnes's argument is the implicit assumption that the public sector is, by default, singularly better suited than the private sector to deal with footing America's tuition bill. A quick look at the facts sheds serious doubt on this claim.

First, Mr. Barnes identifies the government as the exclusive medium by which to help students finance higher education. In fact, he never once suggests that private institutions might also have a role to play. No doubt such thinking comes as a knee-jerk response to the shady actions of a few independent lenders in the past.

However, here's just one example of how relying on the private sector to make college more affordable can work: Recently, there's been a push in the loan industry to engage in "differential lending treatment" based on personal credit credentials and the institution a student attends. The government, too wrapped up in political wrangling over issues of fairness and equity, has rejected the plan. Yet, freed from bureaucratic constraints and fueled by profit-motives, private lenders have embraced it with remarkable zeal.

The results are undeniably favorable for private lenders. But what's often overlooked is that the results are undeniably favorable for students as well. Why? Students now receive loans that are actually tailored to their needs--in terms of interest rates, repayment schemes, and forbearance policies--thereby promoting greater flexibility in borrowing. This lesson shows that private institutions, even when pursuing their own-self interests, can generate positive spillovers in times when the government is unwilling or unable to do the same.

Second, Mr. Barnes calls for increased transparency in the loan industry by encouraging employers, colleges, and the government to be more upfront in explaining their tuition assistance programs. That's all fine and good, but without strong complementary or enforcement measures, it's probably just wishful thinking.

As it stands now, few incentives exist for financial aid officers or guarantors--beyond simple generosity--to be innovative or efficient, or to protect the interests of borrowers absent competitive pressures. Although such a paradigm may have been adequate in closed, paternalistic lending environments of the past, it's no longer viable today.

Private lenders, on the other hand, rework traditional assumptions about roles, rewards, and accountability within the framework of entrepreneurial activity. For instance, by fostering a direct-to-consumer delivery channel, they enable students to take advantage of competitive interest rates with reduced eligibility requirements. Moreover, by engaging in market-driven competition, they spur new and potentially superior offerings from nontraditional lenders entering the sector. Also, by capitalizing on economies of scale, they typically have better resources to counsel students on everything from consolidation to refinancing of loans.

Ultimately, Mr. Barnes's proposals to lessen the burden of rising college expenses, however well-intentioned, are unlikely to move policymakers in the right direction. A better solution is to enhance opportunities for students to attend college through unfettered, choice-based arrangements--public, private, and otherwise--that are grounded in free enterprise and creative destruction.

Thomas Gift is a research assistant at AEI.