In August 2006, an incoming Cal State-Fullerton freshman had a bright idea about paying for higher education. Instead of doing what more and more students are doing these days—borrowing—he decided to go on eBay and auction off a share of the most valuable thing he owned: his future. "Hi there," he wrote. "My name is Ron Steen. I am selling 2 percent of my future earnings for a chance to go to college."

A few months later, U.S. congressional leaders hammered out the 2007 budget. Like Steen, they were concerned about skyrocketing tuition: between 1989 and 2005, college costs had increased at double the rate of inflation. Their solution was to pour more money into grants and loans while hoping that colleges would keep tuition growth under control. Later in 2007, President Bush signed legislation providing an addition $1 billion for Pell Grants and slashing student loan interest rates by up to 50 percent.

While the policymakers congratulated themselves on their generosity, eBay was pulling down Ron Steen's offer before the auction could begin. But in the long run, Steen's strategy may turn out to be the wiser course. With steadily increasing prices and a bevy of financial scandals, the higher education market bears more than a passing resemblance to the respective markets that preceded the dot-com crash of 2001 and the subprime mortgage meltdown of 2007. Except that this time, the problem is too little market speculation, as opposed to too much.

Because most student loans are guaranteed by the federal government, there is little risk involved for colleges or lenders. But for students who borrow too much, drop out before graduation, or earn less than they anticipated, the result can be financial hardship, ruined credit, and default. Today, one in ten student borrowers default on their loans within a decade of leaving school. …

Read more from this op-ed on The American's Web site.