America must solve the college debt crisis

It's graduation season, and newly minted college alumni are heading out into a tough economy with an unprecedented burden of debt.

America can't keep graduating students who owe so much. Student indebtedness has reached $1 trillion, and a recent Federal Reserve report found that, excluding borrowers with deferrals, 27 percent had past-due balances. Aside from the danger of mass default, heavy debt makes it harder for students to pursue further education, start a business or buy a house.

The Obama administration has already let 1.6 million borrowers cap their student loan payments at 10 percent of income, with loan forgiveness after 20 years. Millions of additional borrowers will probably need help down the road.

But in this graduation season, it's worth focusing on how to protect future grads from a future blighted by debt. Although there are few quick fixes, the broad outlines of a remedy are clear.

First, colleges have to become more efficient so students needn't borrow so much in the first place. This will mean greater use of technology to reach more students and teach them better at lower cost. Internet-based courses, for instance, can generate tons of data showing whether students are learning and what material is most troublesome.

Students can push colleges to get more efficient by making shrewder choices. New Yorkers are blessed with the bargain SUNY system, and could avoid some debt by choosing it over mediocre private schools that cost far more. The pressure of such choices can force pricey colleges to cut costs and boost quality. High schools, meanwhile, have to ensure that college-bound students are truly ready for college-level work. This would alleviate the expensive remedial burden borne by the community colleges. Again, lower costs mean less borrowing by students.

Students are also going to have to get smarter about what they choose to study and how much effort they invest. More than anything, our economy needs more graduates in science, technology, engineering and math -- the "STEM" fields. Granted these are hard subjects, and they aren't the best fit for some students. But college graduates often regret borrowing thousands to get a degree that has little marketplace value. Better information on earnings prospects and the monthly cost of student loans might help; if students are going to major in semiotics -- or coast through school taking gut courses -- they should at least do so with their eyes open.

Finally, there's the role of government. Public funding for higher education has plunged all over the country, leading colleges to shift more of the burden onto students, who end up borrowing more. In New York, inflation-adjusted state funding for SUNY operations (excluding community colleges) is down 26 percent since 2001-02.

Federal student loans, moreover, are aimed at increasing access to higher education, but they've had the effect of subsidizing soaring college costs -- encouraging yet more borrowing. In January, President Barack Obama offered some useful proposals linking funding to campus cost control, but predictably, they went nowhere in Congress.

Perhaps Albany can succeed where Washington has failed. State Senate Republicans last week proposed some creative ideas, including a prepaid tuition plan letting families lock in today's prices at any state or private institution. But private schools could only participate by limiting their tuition hikes to SUNY's rate of increase.

The senators also propose paying graduates who finish on time and perform community service $3,000 a year for up to four postgraduate years if they remain in state. That would certainly help with student loans. But most of those who graduate from college in New York stay here anyway. Better to target this money -- perhaps to STEM grads or those who make their homes in depressed areas after graduation.

Reversing the tide of student borrowing will require colleges, students and lawmakers to change. It's time all parties graduated from the bad habits that got us into this mess.