The question may be should people like O’Malley, who has resources and could have made other choices, be allowed to borrow that much at a somewhat low rate, with the taxpayers guarantying the loan?
Assuming O’Malley borrowed all the money as a Plus loan, should he or any parent be allowed to do that or should there be a limit? Plus loans are to help families finance education. Should there be a limit? The O’Malleys may have made the same decision to finance their daughters’ educations even if they needed to take out private loans or borrow from family or sell an asset, but many other families wouldn’t or couldn’t make that decision without the government guarantee programs. Should there be a limit, thus funneling the students toward more affordable schools? I think so.
If you want to borrow $150k for schools, fine, but do it without government guarantees and lower interest rates (remember the Stafford rates were artificially low until 2013, and are still lower than market). Banks weren’t so gung ho on making education loans until the guarantees were made by the government, and maybe they’d make fewer of them if borrowers had to meet the same standards as borrowers do for other loan types. There aren’t many bank customers getting $100k unsecured loans these days. Regulators would be looking at those loans pretty carefully if not for the government guarantee.
The government programs should be to assure educational opportunities, not to insure that everyone gets exactly what he wants, the Cadillac of educational opportunities. If students in every state can get an education for under $100k, then the limit on all types of government guaranteed loans for that student - Stafford, Plus, Perkins, private - should not exceed that amount. Student wants something else? Fine, but he needs to figure out how to finance it without a government guarantee.
OMalley didn’t do anything but use the government sponsored programs available to him, but I do not think that the programs should be so widely available.