EDITORIAL: College debt a looming threat

The Federal Reserve Bank of New York says the total amount of U.S. student loan debt has quintupled since 2004, surpassing both credit card and auto loan debt as the single biggest nonhousing liability in the country. The Consumer Financial Protection Bureau compares the student loan industry to the subprime mortgage market prior to the explosion of the housing bubble and warns that such an unsustainable amount of debt will severely limit the ability of young Americans to buy homes, create businesses and save for retirement.

In response, Sen. Marco Rubio of Florida — who graduated from college with a mountain of stifling student loan debt himself — co-sponsored the Student Right to Know Before You Go Act in 2012, which would provide students with reliable data regarding how much they can expect to earn with their degrees and how much loan debt they will owe. Sen. Rubio, seeking the Republican nomination for president in 2016, says no such information was available to him when he graduated.

“I believe that before any of our young people take out student loans, that school has to tell you how much you can expect to make when you graduate with that degree from that school, so people can decide whether it’s worth borrowing tens of thousands of dollars to major in basket weaving,” he said during a speech in Iowa last month.

It is not in the interest of America’s colleges and universities to disclose to students whether they might be able to repay their student loan debt for a particular degree. Higher education officials believe the value of a college diploma is indisputable. However, because the federal government has taken over the student loan industry and imposes all kinds of mandates on colleges as a result, the honest financial discussion recommended by Sen. Rubio should be one of the mandates.

But the senator should take his idea one step further: Students also should be informed of the debt burden they’ll face if they don’t graduate. A largely ignored part of the student loan debt crisis involves indebted dropouts. Millions of students take out loans to pay for degrees that they never obtain and face the burden of repayment without the earning power of a diploma. Graduating with a pile of debt is bad enough. Leaving college with a lifetime of debt and no degree to show for it is a double whammy.

Student loan debt is an important national issue for young voters and parents. Democrats suggest addressing the problem through loan forgiveness. But those proposals aren’t fair to students who have earned scholarships or to parents who have saved for their kids’ educations. The larger issue here is the rising cost of college and the diminishing value of a diploma — the more money the federal government makes available for students to borrow, the higher tuition costs go, the more debt students take on.

America’s student loan debt is growing because more students are taking out loans and borrowing bigger amounts. But if students are armed with useful financial data, they might choose cheaper alternatives — and force colleges to do more to contain costs. Sen. Rubio’s plan is worth passing.