Would you cosign a loan if you knew there was a good chance the person you were signing for would default on the loan, making you responsible for the debt?

Of course not. But that is exactly what is happening to the federally backed guaranteed student loan program. Students are not paying back their loans, and loan defaults are expected to reach a record $1.6 billion this year.

In an attempt to counter this, the Department of Education is proposing regulations which would make financial institutions, colleges, universities and other postsecondary schools partly responsible for unpaid loans.

Under the proposed rules, after 1990, educational institutions with a high percentage of student loan defaults would be subject to penalties, including exclusion from participation in federal student aid programs. Financial institutions would also be responsible for up to 10 percent of a loan, whereas now the federal government fully guarantees them.

The banking industry however, contends that making lenders share the risk would force them out of the program.

The DOE is right in wanting to alleviate this burden from taxpayers, but it should not do so by endangering lender participation in a program which so many students rely on to go to school.

The propsal should include provisions to make it possible for the IRS to go after loan defaulters just as if they were tax evaders. And new applicants to the program should be required to sign a statement waiving their rights to due process should they default on their loans, thus making it easier to garnish their wages.