Imagine you’re watching a basketball game. A player grabs a rebound and starts on a fastbreak, driving down the court with a clear lane to the basket. But instead of taking it all the way and throwing down a vicious dunk, the player pulls back and kicks it out across the court, beginning a long and muddled series of passes between dysfunctional teammates that end with a turnover.
Or if you’re not a sports fan, picture this: A friend of yours meets the person of their dreams. The two of them immediately click, and soon enough, it looks like they’re headed for marriage. But this friend of yours hesitates, worried about what might happen if they can’t invite everyone they’ve ever known, including people that hate them, to the wedding.
OK, one more: A Democratic president has an opportunity to issue a proclamation that would provide an instant boost to the economy and win the adulation of generations of voters. But instead of embracing the idea, he vacillates and suggests doing far less ambitious and effective, potentially squandering all the potential goodwill.
(That last one wasn’t really a metaphor.)
Even if Democrats pull off an unlikely double victory in the Georgia special elections, it’s unlikely that Joe Biden will have much of a chance at passing any big, transformative legislation in at least his first few years in office. His best bet will be to instead rely on executive orders, and there are few more consequential orders he could issue than one that cancels the unconscionable amount of student debt crushing the dreams of tens of millions of Americans.
Forgiving student debt isn’t some far-left socialist plan, either. It was proposed by Sens. Elizabeth Warren and Chuck Schumer (!) this fall, and once Biden won the election, Schumer renewed the call for the president-elect to issue student loan forgiveness to the 42 million Americans drowning in school debt.
Let me emphasize again that it doesn’t get more centrist than Senate Minority Leader Chuck Schumer.
On Monday, Biden reaffirmed his campaign trail commitment to forgiving up to $10,000 in student debt to people who are “economically distressed.” That would have a minor impact at best, as just 7% of school loans are privately issued: limiting any relief to those parameters and calling it canceling student debt would be like tossing a half-eaten ice cream sandwich at a homeless encampment and saying you solved world hunger.
Warren and Schumer (along with a coalition of over 230 groups) are urging Biden to go much further. They want him to wipe out up to $50,000 of federal school debt per person; with the average debt-holder carrying a $32,000 balance, one stroke of the pen would free tens of millions of people from the shackles of substantial financial burdens.
Without having to negotiate with Congress or ask any member to show some backbone, Biden could enact the equivalent of a stimulus that provides more than 40 million people with an average of nearly $400 a month. It would be a desperately needed shot in the arm for an economy about to fall off a cliff, especially with Republicans refusing to budge on more COVID relief.
Why Student Debt Is So Pernicious
Student loans are a fundamentally predatory product. The erosion of the American manufacturing base and other blue-collar industries has turned a college degree into a quasi-necessity, while the skyrocketing price of higher education has forced over two-thirds of students to take out loans to pay for it. Then the processing fees charged by loan administrators and the egregious interest rates that compound on the initial loans wind up putting people in far more debt than the actual cost of their education, forcing them into years worth of payments that don’t even touch the principal.
In the 1960s, “a student could work a minimum wage summer job for 12 weeks and pay the average tuition bill,” one recent report noted, while today, “a student would need to work full time for over 53 weeks at the federal minimum wage to pay for the average tuition.”
One friend I spoke with about his college debt told me that he’s still paying off his loans 10 years after graduating, which is fairly typical for people who take out student loans. He has to cut three checks a month, and due to interest, he’s still paying off debt from a one-semester stay at a private college he attended in 2001.
Strangers were very eager to talk when I asked on Twitter for stories about college loans. Every story was infuriating, even more so because they weren’t at all unique. When it comes to student loans, there are no exceptions for extenuating circumstances, no adjustments or leniency in the face of tragedy. They follow people everywhere, casting dark shadows over their futures.
One woman in her 40s said that her husband had to leave architecture school after their son died in 2009. His financial aid had already expired, so he couldn’t afford to go back to school, as he’d already accrued a mountain of student debt from tuition and expenses not covered by the limited assistance. They declared bankruptcy in 2010 but couldn’t discharge the college loans — thanks to a law sponsored by Biden himself — and still have $85,000 left to pay off a decade later. The family, already touched by such tragedy, is struggling beneath the weight of the debt.
“I don’t want anyone to be in this situation,” she told me. “I think access to education helps create a level playing field that our society desperately needs. My parents were teachers, I’m an instructor. I want my kids to grow up in an educated world. My oldest isn’t even interested in college after learning about student debt. He’s looking at trade schools.”
Trade school is a perfectly good option, of course, but having ambitions steered by the sheer cost of education is counter to what we tell ourselves is supposed to happen in this country.
A Florida State grad named David reached out with a particularly egregious story that is illustrative of just how inescapable this scam has become. As a Florida high schooler, he was the recipient of a Bright Futures Scholarship, which was supposed to cover his entire tuition. Halfway through his time at FSU, however, the state legislature capped the scholarship’s value so that it no longer increased alongside inflation.
“At first this gap only amounted to a few hundred dollars per year, but by my last year, it was costing me thousands,” David said. “I filled the gap with student loans, and all told I graduated with around $12,000 in debt, which I’m still paying off.”
He graduated eight years ago. During that time, FSU built a brand new $55 million dorm to replace one that he lived in as a freshman. I can relate — Syracuse, where I went to school, has been splashing out cash for new buildings left and right over the last decade while jacking tuition up ever-higher. Students still have to buy textbooks.
“As an alum, I get calls from FSU asking me for donations,” David wrote me. “I have them saved in my phone as ‘FSU Wants More Money,’ and I always tell them to call me back in a few years after I’m done paying off the money I’ve already given them. They don’t listen; they always call again in a few months.”
The Biden proposal would cut off aid from anyone who makes more than $125,000 a year, which is a fatal flaw. Student debt payments often inflate as the borrower earns more money. For instance, this week I spoke to a guy named Henry who is now paying $2000 a month to trim down his more than $100,000 debt line, a possibility only viable due to the pandemic’s pause on interest. Henry’s total balance ballooned during the late aughts, when Henry had to take a few years off from paying the loans while helping a sick family member.
Canceling student loan debt is also a way of addressing racial injustice. The numbers are startling. In 2016, a Brookings Institute study found that the average Black student graduates with $7,400 more in student debt than the average white student, a difference that then explodes to $25,000 more within the next few years. Another study found that 20 years after graduation, the median white student has paid back about 94% of their loans, while the median black student still owes about 95%, or just over $18,500.
Even for Black borrowers who can pay, the debt acts as a reminder of the structural disadvantages that persist throughout the country. A study published this past winter noted that the average white family has a net worth of $171,000, while the average Black family’s savings is at just $17,500. Henry, who is black, notes that the lack of inherited wealth or a safety net serves to force them to put everything else on pause.
Having been able to pay down some of his principal, Henry will finally feel comfortable adopting kids. The decision to start a family shouldn’t be at the mercy of interest rates.
If you’re still not convinced and need a political argument, remember that millennials and Gen-Z voters turned out for Biden in record numbers, while every other age demographic went for Trump. But that doesn’t mean they’ll stay Democratic voters — as I constantly repeat, you actually have to promise and deliver tangible benefits to people in order to earn or keep their votes. Trump’s tax cuts for the rich and big businesses cost the nation $1.9 trillion. Canceling student debt would run $1.6 trillion. There’s no excuse not to do it.