Thanks to Elizabeth Warren, student loan forgiveness has entered the mainstream of the American political conversation, at least on the left. But it’s not just because of Warren, though she deserves major credit for being the first serious candidate to put forward a proposal on the issue. Admittedly, I’ve become a strong Warren supporter so I suppose I’m open to being labeled as biased, but for whatever it’s worth it is a policy I’ve long wanted to see put forward. That’s because loan forgiveness is quickly becoming an economic necessity for our country and financing college education that is becoming increasingly necessary with debt is, frankly, a really bad and downright stupid policy and we should completely stop doing it all together in favor of a better alternative.
And that’s the short explanation as to why Democrats should be championing the policy enthusiastically.
First, some hard facts on the student loan debt crisis in America. In 2018, total student loan debt in America totaled $1.52 trillion with 44.2 million people in America holding student loan debt. Delinquent balances are in the tens of billions, highlighting just how much Americans are struggling, with delinquent balances of 30+ days totaling $32.6 billion and “seriously delinquent” balances (90+ days) totaling $31 billion.
This is a huge chunk of our economy. The bulk of that debt of course is held by Americans under age 40, but it’s not exclusively their problem. The problem is exceptionally sobering when you consider the reality of senior citizens in America struggling with crushing student loan debt. Americans over age 60 owe more than $86 billion in unpaid student loans and 40 percent of those with loan debt over age 65 are in default, many even seeing their social security checks garnished. Think about what all this means not just for ordinary Americans struggling to get by month by month with a crushing debt hanging over their heads as they try to figure out how to make ends meet, but for our economy with an increasing number of Americans unable to buy a home, start a business, or save for retirement. That’s not even getting into the awful reality of Americans killing themselves because they can’t afford to pay their loans. This situation can’t continue. We either put an end to it, or it’s going to sink our economy and take more people than it already has down with it.
That’s why the push back on debt forgiveness concerns me tremendously, particularly reading this diary citing this opinion piece. The author offers four arguments against student debt forgiveness, and I’d like to offer a respectful rebuttal here, point by point. (And let me stress, I mean to do so respectfully.)
1. The first argument is that many students use their student loans to finance excessive life styles, using their loans to pay for new carts, etc. No facts or data are shown how many students do this or that it is an excessive problem America. Some surely do, but that doesn’t take away from the $1.5 trillion dollar crisis driving people to suicide and wrecking our economy. And without data to back it up, it smacks of an argument akin to saying we should cut food stamps because some people blow all their budget on junk food or that we should make it harder to file bankruptcy because a few people are running wild with credit cards. Just as those arguments don’t get at the real problems that drive food insecurity for the poor or bankruptcy filings, neither does this argument hold water. More likely than buying cars, I’d suggest students are taking out massive amounts of loan debt because college in America has become really, really expensive, with the cost rising eight times higher than that of wages in this country.
2. The second argument is, essentially, that forgiving loans is unfair to students that didn’t take out massive amounts of debt. This is a common argument, and I, for the life of me, just can’t get on board with it. I tried very hard not to take out too much debt when I was in college. My spouse, admittedly, wasn’t nearly as careful. Is that a mistake he should pay for with crippling debt for the rest of his life? No! He was a kid in college and the fact of the matter is that for whatever mistakes he made at that point the bigger mistake was dreamed up in Washington when it was decided that giving 18 year olds just getting out on their own loans to finance their education was the best way to finance an increasingly necessary college education. It doesn’t matter if some of us made better decisions back then than others. The fact is that this was a stupid and destructive way to finance higher education and it shouldn’t have been put in place to begin with. For that matter, you can’t look at the facts about what this debt is doing to our country, from the seniors getting their social security garnished to people killing themselves because they can’t make their payments, and get strung out over people making bad financial decisions between the ages of 18 and 21. We have bigger problems to worry about here.
3. I actually agree with the third point, that colleges have played a role in the problem with misleading marketing and hidden costs and fees. Yes, that needs to be addressed, and I’d go beyond that point to getting at some of the reasons for the higher costs, ranging from declining state aid to sometimes unnecessary building projects on campuses to outrageous salaries and benefits for administration. (Students shouldn’t have to foot the bill for the college president to live in a mansion paid for by the college on top of a six figure salary as happens at some schools. He can buy his own damn house.) So yeah, there’s a place to start finding common ground and I’d agree that any higher education plan needs to look at that.
4. Lastly, the author is concerned about the message that allowing students to take out massive amounts of debt and then not have to pay them back will send and the kind of lesson it will instill. Personally, I think the massive damage this nonsensical policy has done to our economy and is doing to individuals is of much less theoretical concern, but there’s a practical way to address that as well: don’t finance higher education with student loans. That’s the original bad idea with worrisome results here, and we shouldn’t lose sight of that.
In fairness to the author, he does offer some ideas on how to deal with the problem of student loan debt and acknowledges that it’s a significant one for the nation. But the solutions-a 30K graduation gift that can go towards paying off loans, eliminating interests and penalties, and an Americorps style program that provides scholarships-are all the kind of nibble around the edges policy ideas that won’t get at the bulk of the problem and with social security checks being garnished, the up and coming two generations being the first ones to see worse economic prospects than their parents or even many of their grandparents, and a not insignificant number of Americans literally out on the ledge over their debt it is time to rip the problem out root and branch. That means forgiving massive amounts of student loan debt and finding a better way to finance higher education up to a 4 year degree. (Oh, fun fact, in 2017 the federal government provided about $100 billion in student loans and an additional $60 billion in grants and tax preferences for higher ed. The cost of subsidizing tuition at public colleges and universities is routinely put at around $70 billion with the highest estimate I can remember seeing being in the $80 billion range. Food for thought...)
And look, I can agree that forgiving ALL student loan debt can be problematic. There are a lot of wealthy people who took out loans and can afford to pay them off. I can fully see why people don’t want to pay those loans. That’s why I think the plan Warren puts forward makes sense in that it doesn’t eliminate the debt of the wealthy but instead is aimed at poor, working class, and middle class Americans, the people suffering from crushing debt in the first place. Bernie Sanders’ plan goes further and eliminates all the debt, wealthy people and all. I’m less of a fan of that but that’s a better deal than this mess we have created with student loans in the here and now.
Our economy is being destroyed in significant part by student loan debt. Peoples lives are being destroyed by it. You take that debt away and imagine the money that leech is sucking off our economy going into buying new homes, starting new businesses, and filling savings accounts. Imagine how much happier and healthier we will be as a society. Think of it as America getting back on track to the positive direction we were heading in more than forty years ago before things started to take a downward turn. No it won’t solve every problem, but it would go a long way to making America a better place and as bad as the problem is getting we can’t afford to dismiss it because some folks are concerned about a few college kids buying cars.
The bottom line is we can’t afford to ignore the crushing debt that is breaking our economy and our people. We can’t afford halfway measures that don’t really fix the problem. We’ve got to end this crushing debt before more of us are out on the ledge holding our garnished social security checks.
It’s just got to be done. It can be done. And we’ll all be better off for having done it.