For higher education, the solution is more value for less money. Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years — but with the school that received the money on the hook for all or part of the unpaid balance.

Up until now, the loan guarantees have meant that colleges, like the writers of subprime mortgages a few years ago, got their money up front, with any problems in payment falling on someone else.

Make defaults expensive to colleges, and they’ll become much more careful about how much they lend and what kinds of programs they offer. China, which has already faced its own higher education bubble, is simply shutting down programs that produce too many unemployable graduates.

So far, Sinophile pundits like the New York Times’ Tom Friedman don’t seem to be pushing this idea for America. I wonder why not.