American higher education’s “dirty little secret”
President Obama’s recent signing of the bill to keep student loan interest rates low is a move in the right direction toward helping students afford college. But as we’ve discussed, it’s not enough.
And, he argues, the federal expansion of student debt to pay for expensive tuition, threatens the economy. Because the federal government keeps extending credit for student loans, there’s no incentive for colleges to keep their costs in check.
Taibbi also notes that even Elizabeth Warren (D-MA), one of the senators pushing for lowering the student loan interest rate drastically, actually voted against the bill that President Obama signed because the plan was only a short-term solution for the student loan problem.
“The dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It’s not the cost of the loan that’s the problem, it’s the principal — the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008. … Throw off the mystery and what you’ll uncover is a shameful and oppressive outrage that for years now has been systematically perpetrated against a generation of young adults.”
Under the new deal, Taibbi says the federal government will make $185 billion over the next 10 years on student loans. And since student loans are not dischargeable in bankruptcy, there’s no way out for young borrowers who can’t pay their student loans.
“Even gamblers can declare bankruptcy, but kids who enter into student loans will never, ever be able to get out of this debt.”
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