Almost 20 years ago, when I was applying to MBA programs, the conventional wisdom was that unless you could get into a top-10 program, you probably shouldn’t go. The tuition at a high-ranking program was steep (I would eventually graduate with nearly $100,000 in debt), but if you managed to get in, recruiters for six-figure jobs would swarm onto campus and practically beg you to work for them.

The tuition at lower-level schools was also very steep, but students had to labor frantically to secure a job afterward. Some found jobs that were no better than the jobs they’d left to go to business school. The lower the ranking of the school, the less value the graduates got out of their degree, until you got down to programs that seemed to mostly be run for the benefit of the university that was collecting the tuition check.

Business schools, like law schools, are cheap to operate. No expensive labs, no distant fieldwork. Just a room, a blackboard, some chairs and a professor. And for this, students were willing to pay very handsomely. So these programs became cash cows for the universities.

There is a limit, of course, to how sorry we should feel for people who borrowed lots of money for a graduate degree, and found that it wasn’t a surefire ticket to easy prosperity. I am sympathetic to those people; indeed, I am one of those people. But people with graduate degrees, even not-very-useful-ones, are more affluent, more educated and more skilled than the general population. We should not exaggerate the tragedy of their fate simply because they are more like most of the readers of this article than is an unemployed welder in Flint.

We should, however, be concerned because the cost is spreading. Having finally reached the limits of American parents to bear ever-increasing bills for undergraduate tuition, struggling colleges are now turning to graduate programs to fund their operations. Indeed, schools often encourage graduate students’ naïve faith, painting a rosy picture of future employment prospects that is, to say the very least, highly selective.

It’s bad enough that schools do this; it’s worse still that the American taxpayer is helping them. For it is hard not to suspect that the proliferation of master’s degrees programs has less to do with exploding employer demand for advanced degrees in Jewish studies or public history, and more to do with the availability of student loans to fund those degrees. The government caps the amount that undergraduates can borrow, but offers graduate students considerably more rope with which to hang themselves.

Most of the eye-popping figures that you hear about student debt are in fact averages that include graduate programs. Once you separate those figures, you see that most people with bachelor’s degrees actually took on modest sums that look more like a car loan than a mortgage. There are pockets of trouble in Undergraduate Land: students at for-profit colleges, and people who borrowed relatively small sums but never finished their degree. But most of the high-debt burdens fall on people with graduate degrees.

As long as those degrees bring a big income boost, that’s fine. But there’s a troubling wrinkle: The proliferation of master’s degrees may simply allow employers to demand an advanced degree for jobs that used to be open only to candidates with a bachelor’s degree. That makes things easier for employers, by winnowing down those huge stacks of resumes. It’s certainly nice for the colleges. But it costs the graduates enormous amounts, not just in tuition, but in the earnings they forgo while they’re in school. And considering all the subsidized repayment programs the government has made available to help graduates manage their debt burden, it is also costly for taxpayers.

In time, of course, prospective graduate students may wise up (as seems to have already happened at low-ranked law schools whose graduates had dismal employment prospects). But in the meantime a lot of damage can be done. And if the master’s degree simply becomes “the new BA,” then we may all end up stuck on a treadmill of degree inflation and higher tuition bills in order to get the same old jobs.

Personally, I’d like to see the government get out of the student loan business entirely; I suspect that one reason college now costs so much is simply that it can, thanks to unsecured government loans that cover the growing gap between tuition cost and parental means. But short of such radical reforms, we should consider capping graduate school loans at something close to the caps on the loans made to financially independent undergrads. Some allowance could perhaps be made for very expensive programs that require equipment. But for most programs, there’s no real reason for the government to offer more aid for a graduate degree than for an undergraduate degree.

But wouldn’t this cripple the ability of students to get valuable advanced education? Not really. Advanced education that truly is economically valuable should qualify for private loans.

There are, of course, reasons besides a paycheck to get an advanced degree, and I support anyone who wants to do so. But I would never advise them to go into debt for that education. And as a taxpayer, I don’t want the government to subsidize it through broad student-loan programs. If there are degrees that are so valuable to society, but so low paid that they require government subsidy, then the government should pay the schools to provide the education, instead of indiscriminately offering artificially cheap loans to anyone who enrolls in a graduate program.

Of course that still leaves the question of what struggling schools will do without their cash cows. That’s a hard problem. But I’d rather see schools struggling with their finances than thousands of grad-school grads struggling with theirs.

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of “The Up Side of Down: Why Failing Well Is the Key to Success.”