As any parent of a teenager or 20-something knows well, university tuition costs are out of control. In recent years, tuitions have been rising at double-digit rates of inflation.

Now even public universities, which are highly subsidized through state and federal grants, are priced at the $10,000- to $15,000-a-year range. Many of the elite private colleges now charge up to $30,000 a year.

College costs have been growing at about three to five times the rate of inflation found in other industries. There is no logical reason for an information-based industry like higher education to have rapid inflation in costs. For-profit colleges, such as the University of Phoenix, have held costs far below the rates for publicly subsidized colleges.

All of that inflation in tuition corresponds, oddly enough, with a declining percentage of students who graduate in four years. Today, only a bit more than one of three entering freshmen graduate in four years.

Why is it that colleges refuse to get their costs under control? The major explanation appears to be the growing third-party-payer system — through grants in aid, student loans, scholarships and direct aid to universities. A shrinking share of the college budget is paid by the students or their families themselves, so there is little pressure to hold tuition costs down.

At least with the federal student loan program, begun in 1965, the students are supposed to pay back the tuition costs over time once they start working. For years, the default and delinquency rates on student loans were scandalously high. Fortunately, the private banks and collection agencies have clamped down on student-loan scofflaws, and the program’s monetary losses have declined. But the institution that has proved to be worst in collecting on delinquent loans has been the government itself.

Starting in 1995, the Clinton administration launched a program called the Direct Student Loan Program. That allowed students to apply for student aid directly from Uncle Sam and thus bypass the private lenders altogether. It was supposed to cut costs and leverage the government’s lower borrowing costs.

Instead, the program was a kind of “privatization in reverse.” Instead of contracting out the lending function to professional borrowers, the government decided to play the role of banker and debt collector and keep the activity in-house at the Education Department. The results have been financially troubling. It turns out the government does a lousy job collecting on these debts.

Since 1997, the Direct Student Loan Program has lost money for taxpayers every year at ever-escalating costs. In 2003, the most recent year for available data, the net costs of the program exceeded $2.8 billion. The U.S. Government Accountability Office estimates that the government loan program has a cumulative net balance of negative $10.7 billion. The program is bleeding money.

The House Committee on Education is expected to decide on the fate of the Direct Student Loan Program over the next few weeks. It should shut this money-losing operation down. Private banks are best able to run a loan program.

In addition to pulling the plug on the inefficient direct loan program, the U.S. government has to do a better job clamping down on unpaid student loans. By some estimates, there are more than $10 billion of unpaid student loans that could be collected and repaid into the Treasury to reduce the federal debt. Moreover, the federal government should impose more stringent income tests on the students, and especially their parents, to make sure that loans are only issued to kids from families with financial need.

The best way to get college tuitions under control is for the government to start forcing more of the costs onto the backs of the families and students themselves. If students pay more, costs of universities will be driven down and quality will be driven up. Students will start thinking twice about the economic value of women’s-study programs and consciousness-raising classes that have no market return and whether overpriced tenured professors add value to the college experience. They will begin to ask whether a Harvard degree is really four times more valuable than a degree from the home-state university. And once they start footing the bill, they will start to think that maybe college should be a traditional four-year experience, not a six-year one.

In other words, we need to match price with performance in college education. This is simple Economics 101 — assuming that’s still being taught at our universities anymore.

Moore is president of the Free Enterprise Fund and a fellow at the Cato Institute.