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JAISAL NOOR: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore.
The House is expected to vote and possibly pass a student loan bill that passed the Senate
last week by a vote of 81 to 18. The new bill would tie the student interest rate to market
rates instead of the current 6.8 percent on federal loans taken out for the 2013-2014
school year. Rates on the subsidized Stafford federal loans doubled to 6.8 percent on July
1 because the bipartisan Congress could not agree on a way to keep them at 3.4 percent.
To discuss this news we are joined by Alan Collinge. He's an author and founder of StudentLoanJustice.org,
a grassroots organization and political action committee with chapters across the United
States, and author of Student Loan Scam: The Most Oppressive Debt in U.S. History and How
We Can Fight Back.
Thank you so much for joining us, Alan.
ALAN COLLINGE: Good to be with you.
NOOR: So, Alan, what do you make of this latest news? Is this a victory for students and taxpayers
as Rep. John Kline, Republican chairman of the House Committee on Education and the Workforce,
has said?
COLLINGE: Well, I would say it's a victory to a manufactured problem, and a small one
at that. You know, the actual financial ramifications of the interest rate having doubled was only
about somewhere between $1,000 and $3,000 over the life of the loan for affected undergraduates
to begin with. So it was really not that big of a deal to start out with.
It's nice to see some bipartisanship, I suppose, but, you know, in my view this whole fiasco
has been essentially a distraction to the fact that there are structural problems with
the student lending system that Congress has yet to deal with and absolutely needs to in
a very critical way.
NOOR: Can you talk more about what these problems are in your view?
COLLINGE: Well, the lending system has turned functionally and structurally predatory because
of the fact that the most standard consumer protections that American citizens have every
reason to expect exist for every type of loan don't exist for student loans. They've been
removed. So this includes bankruptcy protections, statutes of limitations, truth in lending
requirements. And a very, very serious and unprecedented collection industry has been
given power that no collection industry has ever enjoyed. And so this has caused a debt
system where it's quite frankly more profitable for the lending side when loans default rather
than remain in good stead.
This is very dangerous, and it has enabled the inflation that we've seen. It has enabled
a cavalcade of corruptions across the system. And while it has greatly enriched the universities
and allowed them to raise their prices willy-nilly and also enabled horrible, or even, I would
say, inexcusable, absent government oversight, it has not helped the students. And, you know,
it's--I guess I would sum it all up by saying it's not the interest rates that the citizens
are, you know, going to public spaces, camping out, and protesting about. It's the sticker
price. And until they deal with the structural problem that I just mentioned, the price of
college will only continue to rise.
NOOR: And we hear a lot of talk of how massive this problem is, hear the number of $1 trillion
in debt. Can you talk more about the scale of this problem?
COLLINGE: Oh. Well, it's--frankly, it's astounding. I started studying this issue in 2005, and
at that time we owed less than $400 billion as a nation in student loan debt. And that
was a huge amount at the time. I mean, it was almost unfathomable. Here we are, what,
eight, nine years later, and we currently owe about $1.2 trillion in student loan debt.
This has raised--the price of college has risen faster than health-care costs, faster
than even home prices before the bubble and bust in 2008. And so I think that puts it
in a pretty good perspective so people can understand the seriousness of it.
NOOR: And what are some common-sense solutions to this problem?
COLLINGE: Well, it's very simple, quite frankly. You know, Congress manufactured this crisis
by removing, number one, bankruptcy protections, but also statutes of limitations, state usury
laws, and other fundamental consumer protections that enable the debt spiral to begin. Similarly,
Congress can very quickly solve this situation by returning at a minimum the standard bankruptcy
protections that should have never been taken away. By doing this, they will force the lending
side to have skin in the game on the side of the borrowers rather than on the side of
the banks. And in this environment, we can expect the Department of Education to begin
cracking the whip on the schools to get serious about lowering their prices, improving their
quality, and so forth. This is how a free-market system works. I mean, the most ardent conservative
economist, including Adam Smith himself, would agree with me.
NOOR: And where is the movement pressuring Congress to do this, to act?
COLLINGE: Well, at StudentLoanJustice.org, we have 50 state chapters that have just gotten
off the ground. And we are doing demonstrations. We're at Occupy Wall Street. In fact, we're
the only presence at Occupy Wall Street. But looking forward, I think that we'll be--we're
going to be starting demonstrations, protests, and lobbying efforts across the country.
And I can only hope that the affected citizens will take this very seriously, because I can
guarantee you, having fought this battle for eight years, that if the citizens do nothing
and expect the powers that be in Washington, D.C., to do their work for them, it will not
get done. It absolutely will not. This is incumbent upon the citizens to fight this
battle for themselves, unfortunately, because we are on our own.
NOOR: Thank you so much for joining us.
COLLINGE: Thank you. It's been a pleasure.
NOOR: And thank you for joining us on The Real News Network.