It is axiomatic to contend that when Congress passes a law, it is almost impossible to reverse it. The consequences of the law may be malevolent, but its boosters will use a metaphorical bullhorn to drown out detractors.

This is the case with the Federal Direct Loan Program, which has provided $150 billion in new and consolidated loans since 1994 for higher education students.

On its face, this seems quite desirable. After all, the federal government has been assisting students obtain a college education for more than 60 years, starting with the GI Bill after World War II.

At the time the loan program was initiated, it was argued that taxpayers would benefit because the “middle man,” banks and private lenders, would be taken out of the financial equation. The theory was predicated on the belief that government loans given directly to students would save money for American taxpayers.

However, the theory has departed from the reality as recent evidence attests. In fact, the program has not provided savings and is paying out more in interest payments — calculated at about $16.5 billion — than it has received from borrowers since its inception.

This is precisely what Congress should consider when it meets in the next few weeks to reauthorize the Higher Education Act and the loan program’s provisions therein.

Any dispassionate examination of the issue will suggest that a high student default rate as well as improper Department of Education payments and student loan forgiveness has made the program a travesty for American taxpayers.

There is little doubt that there is bipartisan support for student financial aid, but the manner of that assistance should and could vary. Presently, many private banks and lenders originate, hold, or consolidate college loans. Many offer federally guaranteed loans to undergraduate and graduate students or their parents. Those may be subsidized or unsubsidized loans, i.e., loans whose interest payments are made by the government while the student is in college or loans whose interest is paid for by the student either while in college or after graduation. Unlike the Federal Direct Loan Program, the Federal Family Education Loan Program, for example, uses private sources such as banks and other lenders to provide federally guaranteed student loans.

As one might guess, the private sources tend to be far more efficient administrators. As President Bush’s erstwhile chief economic adviser, Lawrence Lindsey, noted about the Federal Direct Loan Program, “Leave it to the government to lose money on a sure thing.”

Congressional concern about the direct loan program’s inefficiency led to a General Accounting Office investigation, which noted that since the program’s borrowers were allowed to defer payment of their loans until out of school, a negative cash flow would result until more borrowers begin repayment. But the GAO could not determine when or whether positive cash flow would occur.

Years after this study, the Federal Direct Loan Program, which applies an undeviating interest rate for the duration of loans, is still losing money. The program has actually paid more in interest to the Treasury than the amount of interest it has received from borrowers. By contrast, the opposite has occurred with the Federal Family Education Loan Program, where the rates of borrowers and payments to lenders are subject to market conditions. There is little question where and under what circumstances the taxpayers’ investment is protected.

To state the obvious, when a private company makes a bad decision, those who suffer the consequences are members of the company and stockholders. When government makes a mistake, the taxpayers pay the price.

The Federal Direct Loan Program, based on all reports, is not living up to expectations and it is costing the taxpayer billions. Simply put, there is an alternative in the private sector that is far more efficient than its government operated counterpart. It can provide the same loans and can do so without burdening the American taxpayer.

Congress should take a long, hard look at the Federal Direct Loan Program. If it can put aside its natural bias for a moment, it would realize America’s tax dollars are better spent elsewhere. Congress, are you listening?

Mr. London, author of “Decade of Denial,” is president of the Hudson Institute and professor emeritus of New York University.