Here is an essay I'd like to get out there. This is a draft. Please give it a look, and let me know if any typos, grammos, etc...Free T-shirt to anyone capable of honing this down to OPED length while hitting all the points ;-)
The Interest Rate Debate: The People Are Not Impressed.
Make no mistake about the student loan interest rate “crisis” Congress is foisting upon the citizens currently: It is a distraction. A Tempest in a Teapot. Like so many other debates regarding student loans going back at least 8 years, it does absolutely nothing to affect the structural problems in the student lending system. In the worst-case scenario, where Congress does nothing and interest rates on undergraduate, subsidized student loans double, the impact on affected students will be something like $9 per month, or about $1000 per borrower over the 10 year repayment period. There really is nothing more to this issue.
It's not the interest rate that is getting people out in the streets shaking their fists, it is the shocking increases in sticker price year after year, the resulting debt laid upon the students, and the structurally predatory nature of the lending instrument that is causing the outcry. For years this has been true, and for years the citizens have seen Congress dramatizing and politicizing the small issues, the resolution of which do nothing to bring prices down, nothing to address the ever increasing amounts the students are forced to borrow, and nothing to fix the structurally predatory lending system that stands behind it all.
The unprecedented, and unjustified removal of bankruptcy and other consumer protections have caused this system to turn structurally predatory, where defaults are a preferable outcome to all of the lending elements, including collection companies (and the lenders who own them), the guarantors (who make the majority of their income through penalties and fees attached to defaults), and even the Department of Education, which gets back $1.22 for every dollar it pays out on default claims. Even experts allowing for a completely inappropriate “fair value” accounting method that greatly exaggerates the cost acknowledge that the government profits on these loans, and makes more than had the loans never defaulted.