The Great Student-Loan Scam

The magnitude of federal budget losses is becoming clearer.

The week's best and worst from Kim Strassel, Kyle Peterson, Allysia Finley and James Freeman. Picture: AP

Some economists are predicting a recession in the next year, but the New York Federal Reserve’s quarterly household debt survey last week showed few portents. What it did show is that more Americans are defaulting on their student loans, and that government budget gnomes have vastly underestimated the future taxpayer charge.

Defaults have fallen for most forms of consumer debt as the economic expansion continues. Mortgage delinquencies last quarter hit a historic low. But severely delinquent student loans have soared since...