Rolling Stone: Federal Student Loans Drive Prices Up, Drive Students into Debt Slavery
July 28, 2014
Rolling Stone magazine—not exactly a conservative publication—apparently ran a cover story last year on the college-loan bubble. (Warning: language. It is Rolling Stone, after all.) While the story presents itself as non-partisan and claims to criticize both conservatives and liberals, it agrees with the (previously conservative) observation that federal student loans themselves are a big part of why tuition costs are so high and increasing so fast. Maybe that understanding is becoming mainstream?
The article is “Ripping Off Young America: The College-Loan Scandal: The federal government has made it easier than ever to borrow money for higher education — saddling a generation with crushing debts and inflating a bubble that could bring down the economy”, by Matt Taibbi.
Partly because it clearly isn’t coming from a conservative with an axe to grind, and partly because it focuses on the human cost of federal loans, the article represents a powerful criticism of current policy.
For this story, I interviewed people who developed crippling mental and physical conditions, who considered suicide, who had to give up hope of having children, who were forced to leave the country, or who even entered a life of crime because of their student debts.
The article is explicit about the causative connection between federal loans and increasing costs:
Bottomless credit equals inflated prices equals more money for colleges and universities, more hidden taxes for the government to collect and, perhaps most important, a bigger and more dangerous debt bomb on the backs of the adult working population.
. . .
The exploding-debt scenario is such a conspicuous problem that the Federal Advisory Council — a group of bankers who advise the Federal Reserve Board of Governors — has compared it to the mortgage crash, warning that “recent growth in student-loan debt…has parallels to the housing crisis.” Agreeing with activists like Collinge, it cited a “significant growth of subsidized lending” as a major factor in the student-debt mess.
One twist that the author adds that previous conservative commentators haven’t is the angle that the government is preying on us and profiting from us:
“It was wrong when banks were making an $86 billion profit on students, but somehow it’s OK when the government makes a $185 billion profit on them,” says Gunnels.
For whatever it’s worth, at NRO, Jason Richwine disputes that; he says (I think) that because so many graduates either default on their loans or qualify for at least partial loan forgiveness, the government has a net loss on student loans, not a profit.
In any case, I’m pleased to see such a forceful criticism of federal student loans coming from somewhere other than conservative analysts. Maybe it’s a sign of a developing consensus that this is one policy we need to scrap. Mr. Taibbi even takes on those who push back on this kind of pushback.
Any suggestion that saddling befuddled youngsters with tens of thousands of dollars in school debts is somehow harmful or counterproductive to society is often swiftly shot down by politicians or industry insiders as an anti-student position.
In a way, America itself is violating the Truth in Lending Act. It’s cheering millions of high school graduates toward college every year, feeding them into the debt grinder under the banner of increased opportunity, when full disclosure would require admitting that there isn’t a hell of a lot waiting for them on the other side, where the middle class has nearly vanished and full employment is going the way of the dodo.