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Matt Taibbi: We're Saddling College Students with Crushing Debt ... and the Govt. Is Acting Like a Greedy Profiteer

"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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The following content originally appeared on DemocracyNow!

On the heels of President Obama’s signing of a measure keeping federally subsidized student loans at a relatively low rate through 2015, Rolling Stone political reporter Matt Taibbi joins us to discuss how the high price of U.S. college tuition and the federal expansion of student debt to pay for it pose a major threat to the economy. In his new article, " Ripping Off Young America: The College-Loan Scandal," Taibbi writes: "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." Taibbi says the federal government is poised to make $185 billion over the next 10 years on student loans, with no way out for the young borrowers: "Even gamblers can declare bankruptcy, but kids who enter into student loans will never, ever be able to get out of this debt."

Transcript

The following is a rush transcript. Copy may not be in its final form.

AARON MATÉ: We begin today with student loans. When President Obama signed it into law this month, the Bipartisan Student Loan Certainty Act was hailed as a major victory for students. The bill reversed a temporary doubling of the interest rate on federally subsidized Stafford student loans that took effect in July. Most students will pay a low rate of around 3.8 percent through 2015 but then see that rate jump as it becomes attached to financial markets. At the signing ceremony, President Obama praised Congress for reaching an agreement, but he warned the temporary fix in rates doesn’t address the underlying problem: the massive cost of college tuition and the debt burden imposed on students and their families.

PRESIDENT BARACK OBAMA: Even though we’ve been able to stabilize the interest rates on student loans, our job is not done, because the cost of college remains extraordinarily high. It’s out of reach for a lot of folks. And for those who do end up attending college, the amount of debt that young people are coming out of school with is a huge burden on them. It’s a burden on their families. It makes it more difficult for them to buy a home. It makes them more difficult—more difficult for them if they want to start a business. It has a depressive effect on our economy overall, and we’ve got to do something about it.

AMY GOODMAN: President Obama speaking in the Oval Office earlier this month.

Well, our next guest has just written an in-depth  piece exploring the nation’s soaring education costs and their dangers. In the latest edition of  Rolling Stone, Matt Taibbi argues that the high price of college tuition and the federal expansion of student debt to pay for it pose a major threat to the economy, as Taibbi writes, quote, "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." Matt Taibbi’s article is called "Ripping Off Young America: The College-Loan Scandal." He’s a political reporter for  Rolling Stone.