COLLEGE AND OTHER postsecondary students are expected to default next year on $1.6 billion in government guaranteed loans. The Treasury will have to pay that amount to the banks and other disappointed lenders. The total is three times what it was five years ago, a reflection mainly of the expansion of the loan program but also of an upward creep in the default rate, now in the vicinity of 10 percent. The cost of making good on defaults is now more than half the cost of the entire program -- greater than the interest payments the government makes while students remain in school. Control the defaults, and badly needed legitimate student aid could be nearly doubled at what would amount to no cost.

As the system works now, the federal government holds the entire bag. The banks make the loans but incur no risk; the states incur very little. Neither has much incentive to be careful about what loans are made or to chase down defaulters when the loans go bad. The banks threaten to make fewer loans if some share of the risk is transferred to them, and no one wants to call their bluff or take them on. The states are also powerful; an effort was made to increase their exposure when the program was reenacted last year, but it mostly failed. Meanwhile, the higher education groups deplore the problem but also seek to minimize and keep their distance from it.

The game has gone too far. One answer may be to reduce the percentage of each loan that the government will guarantee, thereby increasing the risk to the lenders or states. You can bet there would quickly begin to be greater care in the lending of money and diligence in collecting what was due. That would supplement the federal government's own stepped-up collection efforts, which now extend to holding up tax refunds.

But there must also be some policing of and by the schools. Though statistics are poor, it appears that between a fourth and a fifth of student aid now goes not to the students at four- and two-year colleges who come quickest to mind, but to those in proprietary schools -- vocational schools that take in students for profit. The data suggest that these schools, in turn, contribute a disproportionate share of defaults. Unqualified applicants are accepted (if not courted) and flunk out; courses are poorly designed and fail to lead to jobs. The soured former students walk away from their loans. That is the scenario you hear.

No one wants to rule the proprietary schools out of the program -- they perform a valuable service. But it would not be elitist to ask that schools above a certain default rate -- not too far above the average -- either bring themselves in line or be suspended from the program. Most of Congress' energy last year was spent in protecting the student aid program from the administration, which wanted to eviscerate it. That's been done; the dangers now are on the other side. The defaults are an epidemic threatening to become a habit. They cannot be condoned at their present rate and cost. The higher education community can no longer wash its hands of the issue. If the friends of student aid can't clean the program up, they risk letting the enemies do i