Introduction The proper level of education and sufficient level of professional qualification has always been a guarantee of the successful life of an individual as professionalism provides the perfect opportunity of finding a good working place for a person thus supplying the state with efficient professionals. This is a reasonable explanation of the considerable part of the budget provided by the Government for the support of higher educational establishments. However, the results of government financing of higher education, especially in the private sector, seem rather pessimistic and even harmful, thus, demanding reconsideration and changes of government policy towards higher educational establishments. The present situation in the Department of Education concerning governmental subsidies The present situation in the Department of Education suggests that the sum of $ 30 billion is spent by the state on subsidies for higher education, private educational establishments included (McCluskey and Edwards 2009). The scholars offer an excursion to the origin of the first governmental subsidy in education that was granted to World War II veterans and they throw light on the present situation as well. In fact, the present situation with governmental financing of higher education looks as follows: Congress has expanded subsidies, The College Cost Reduction and Access Act of 2007 and The Ensuring Continued Access to Student Loans Act of 2008 also encouraged a greater number of students to take loans and gave the Department of Education additional authority in lending (McCluskey and Edwards 2009). Besides, considerable sums from tax-payers are directed at the provision of subsidies for higher education: 16 breaks in the income tax code for education (McCluskey and Edwards 2009). According to the Budget of the US Government, “$95 billion in loans and grants [are provided] to help 10.9 million students pay for college”. The growth of education inflation No matter how decent and noble are the intentions that drive the Government, the outcome of these subsidies is rather depressing and they show the necessity of changes in the financial system of higher education on the whole and private higher educational institutions in particular. For instance, the growth of education inflation cannot be left without attention. This type of inflation damages the families with low income most of all though the whole system of subsidies is aimed at them. It is difficult to overcome this inflation and it results mainly in low access of applicants from families with low income to higher education establishments and the next negative result is an uneven academic audience with numerous students that are lagging behind the curriculum. In case if the government subsidies are cut down, it will probably create a more adequate academic audience and low decrease the level of tuition that is now fostered by the subsidies to a considerable extent. The amount of fraud and waste in the educational sphere The next problem that is related to government subsidies to education is fraud and waste that should not be left unnoticed. McCluskey and Edwards (2009) set the examples of the intricate fraud schemes in higher education: the scheme put into operation in the t