DEBT-FINITELY SCREWED
Last week, the U.S. Department of Education announced that a new round of student debt relief will cancel $7.7 billion owed by upwards of 160,000 borrowers.
According to his administration, this latest action brings the total to $167 billion in debt forgiven during Biden’s time in office.
The scale of that relief is a largely unrecognized accomplishment of Biden’s presidency and will prove, I believe, an enduring hallmark of his tenure. And as someone who’s over $100k in the hole from an unnecessarily expensive education, I say ‘hear, hear.’
(If you are unsure of where to send thoughtful, chiding comments, I can be reached at kendallatthesheet@gmail.com for those of you who forgot.)
Student loan debt, and the forgivness of it, is a recurring topic of discussion in The Sheet office. So much so that last week, Lunch tried to pawn off my complaining, and distract me with a fairly recent clip from Last Week Tonight with John Oliver. You know, kind of like how teachers turn on a PBS learning special when they have shit to do, and the rugrats just won’t shut up.
Oliver’s diatribe was, in large part, a response to SCOTUS’s 6-3 ruling late last June to strike down Biden’s campaign promise of canceling up to $400 billion in student debt.
Oliver, who has previously compared student debt to a strain of HPV—“if you go to college, you’re almost certainly going to get it, and if you do, it will follow you for the rest of your life”—delivers a cutting rebuke on the absurdity of that debt’s burden in the United States. The statistics regarding that debt, though, are decidedly less funny.
43 million Americans have student debt. That’s 13% of our population. And that debt totals $1.77 trillion—a staggering figure, and higher than the GDP of Australia.
Crikey.
And the history of how that debt accumulated in just half a century is fascinating.
The introduction of the GI Bill in 1944 marked the first major federal effort to provide aid for higher education, intended for veterans returning home from WWII. This was followed by the National Defense Education Act of 1958—a Space Race-era initiative and the first ever federal student loan program aimed at increasing the number of scientists and engineers.
And then the Higher Education Act of 1965 further expanded federal aid, making loans accessible to a broader range of students, regardless of field of study. Over the subsequent decades, multiple administrations introduced and expanded loan programs to increase college accessibility. However, the significant rise in tuition costs began in the 1980s and 1990s, due to decreased state funding for public universities and increased spending on campus amenities to attract students and their wallets.
In the 2000s, the federal government took over direct lending from banks—a changeover intended to simplify the system and reduce costs. However, it also led to the proliferation of loans available to students, further driving up tuition costs as colleges saw a steady flow of federal money.
“And the thing is,” says Oliver, “even as tuition climbed, students didn’t stop applying. They just kept borrowing as much as they could … The mere existence of a student loan industry has ended up contributing to a vicious cycle of rising tuition and higher debt loads.”
Last Week Tonight’s March 17 episode is worth the watch, alone, for the fact that it dispels one much clung-to myth: that taxpayers are being asked to retroactively bail out rich kids’ frivolous degrees.
As Oliver points out, rich kids rarely take out loans. It’s the kids who are relying on the outsized tuition of 4-year institutions for outsized socioeconomic gains that get pinched. The federal program, Parent Plus, for instance, has no income requirement nor limit on borrowing, and allows parents to take out huge amounts of debt to put their kids through college.
Oliver referenced one borrower that said she could barely recognize her own childish handwriting on the documents that committed her to decades upon decades of loan repayments. But it was a decision she made—like so many young Americans—for fear of the alternative: Lack of job prospects absent a degree. Total and irreversible freeze of upward social mobility.
Yet, here we are. Fortune Magazine reports that hiring freezes are up 81% from the year prior. The Brookings Institution claims that wealth mobility is low and that we become increasingly “stuck on the ladder” as we age. Coincidentally, we also accumulate interest, year after year, paying off the very thing that was supposed to help us climb that ladder.
Still, somehow, the US maintains some of the lowest levels of employment that it has in decades.
So I don’t know if the ladder is broken. But it does feel like its rungs are growing ever farther apart.
***
What I resent, in all this, is the suggestion that student debt forgiveness is somehow “un-American.” Or, that to feed one generation a “free lunch” is to raise another with an open mouth.
Oliver included a soundbite from Texas Congressman, Roger Williams who pooh-poohed student loan forgiveness, saying “… in my world, if you borrow the money, you pay back the money. Pure and simple.”
(Congressman Williams—net worth $27.7 million—was the benefactor of a $1.4 million pandemic-era PPP loan which he did not pay back, pure and simple. So, I guess everything is bigger in Texas. Including egos and assumptions.)
It’s funny, really. The people that condemn today’s borrowers because they “worked through college” or lived “hand-to-mouth” are the same people who bought penny candy, walked uphill to school both ways, and are sitting pretty on prized Mono County real estate which they scored for the lump sum of a pack of smokes and a half-decent handjob, back in the day.
Never mind locking in the gains with Prop. 13.
They are also the same people who fail to see student debt relief for what it really is—the breaking of a price gouging/money borrowing cycle and thus, a net societal benefit. Much like giving homeowners tax breaks, or subsidizing corn farmers.
And hell, because I’m 10 months into this gig, and 2 months out of it, I’ll get personal.
I grew up in a household where education was a priority, and college funds were not. My parents, gotta love ‘em, raised 4 kids who liked school, but they couldn’t save 2 nickels to rub together. Not their fault. Shit happens. 2008 was the year the housing bubble burst, my dad declared bankruptcy, and our house was issued a foreclosure notice. It was also the year my sister got into Harvard.
And what do you tell a kid like that?
A kid that worked hard, and wanted something more in exchange for it. Do you tell her that by going to a school she/her family can’t afford, that she’s indulgent, irresponsible, or foolhardy?
I think you tell her to go to Harvard. To take out the money she needs to do it, and bet on herself. Maybe mix in a personal finance course while she’s at it.
The point being, in the conversation surrounding student debt forgiveness, we have strayed far from higher education’s most basic intent. And that is, to better oneself. To make good on the opportunities and decisions that benefited you, and in turn, make better decisions. To take every opportunity that comes down the pike.
The paradox is, dissenters gawk at borrowers for not making more financially-conscious education, career, or lifestyle choices. But students are increasingly reluctant to pursue higher degrees beyond their undergraduate studies in fear of accruing more debt, even though these higher degrees may reap higher-paying jobs that could pay off that debt. Should some of that debt be canceled, The Roosevelt Institute claims, borrowers might be more inclined to pursue wealth-creating investments such as buying a home, or to participate in the broader economy through consumption and entrepreneurship. Black household wealth could increase by as much as 40%. If it really does all come down to money, student debt forgiveness is a stimulus for our economy, and will be for years to come.
But it’s about more than just the money. Isn’t it?
I was taught that betting on oneself is what makes that very elusive American Dream somewhat tenable. So is having the gall to admit our systems can be better, and taking action to make them so.
Hopefully, that teaching bears some truth. Because it sure as shit didn’t come free.
