Understanding the Progressive Position on the Student Loan Debt Crisis
For years now, the progressive political movement has been gaining its foothold on the main stage of modern American politics, and finally, we are starting to see some real strides being made towards addressing the student loan debt crisis in a manner that benefits the people of this country and not the banks and private investors that got us into this mess. It’s not that the movement was dormant; it’s that it was excluded from the conversation altogether. It was hushed into submission. The progressive voice was ignored by the political establishment and the corporate media outlets so that many people didn’t know they had a viable option apart from the dominant political parties. Then, something changed. The 2016 election revealed the deep anxieties that have been festering over time in the hearts and minds of millions of American citizens. It seems now as if their voice is being heard.
Taking a deep dive into the progressive movement
Now, the progressive political movement in America is currently being evaluated and scrutinized as a serious potential answer to the populist issues of the day. The movement comes in direct oppositional response to the populist messaging of the Trump administration, which is constantly criticized for being disingenuously populist in nature. The true nature of Trump administration policies, progressives will be quick to point out, is not populism, but rather, corporatism, favoring the wealthy elites over the good of the people. Let’s take a deep dive into this political movement to understand how it addresses the issue of student loan debt in America.
Most recently, Senator Elizabeth Warren, one of the Democratic contenders for the presidency in 2020, announced her plan on how to deal with the crisis. She proposed to cancel $640 billion worth of student loan debt. Her ambitious plan would provide relief to 42 million borrowers. The cancellation initiative would forgive $50,000 worth of debt for borrowers who earn less than $100,000. This proposal has garnered lots of criticisms, the majority of which ask the simple question: how will she pay for this? It’s a curious question that begs another question: why doesn’t anyone ask how we will pay for it when tax breaks that disproportionately favor the extremely wealthy are enacted? Curious, indeed.
Marianne Williamson and a Politics of Love
Presidential candidate Marianne Williamson speaks to me on a personal level, both in terms of her policy proposals and the deeper philosophical underpinnings of those policies. She advocates for a moral policy stance that truly embodies the spirit of a democratic government of the people, by the people, and for the people – a stance that no longer shackles you and me to the lowest level of a system of economic inequality. The problem, Williamson asserts, is that government has placed concern for the economic prosperity of a few over the concern for the well-being of the many. The answer to the problem, in her estimation, is love and a politics based on love. Don’t be so quick to roll your eyes.
In her book, A Politics of Love: A Handbook for a New American Revolution, Williamson asserts:
The main organizing principle of American society today is not democracy; it is short-term profit maximization for multi-national corporations. Our government does not now function to protect its citizens from overreach by corporations, so much as it works to protect corporations from all those pesky citizens who keep demanding that their rights be respected.
Democracy is not the enemy of an amoral economic system; it’s simply inconvenient to an amoral economic system. The thieves who stole the treasures of our democracy – a thriving middle class, accessible healthcare, a robust educational system, and proper environmental stewardship – didn’t use brute force to knock down the door. No, they used the soft, insidious power of political propaganda that no seriously thinking person should have fallen for. Yet, too many of us were not serious. Too many of us were not thinking. The American people have been played for fools.
As early as the 1980s, the causes of our deepest problems were sold as good economic policy. Plans were laid for an economic reversion to what is basically an aristocratic system; ‘trickle-down economics’ hailed as our economic salvation when in fact it created all manner of entitlement for the few and all manner of misery for the many. It did not uplift our middle class; quite to the contrary, it destroyed our middle class: from workers losing their jobs when corporations got tax breaks or moving their factories overseas to farmers being pushed off their land so agribusiness could take over to mental health care facilities being closed all over the country to attacks on unions, stealing from the middle class in order to give more to the rich was actually sold as good economic policy. Over and over we’ve elected those whose policies exalt the profits of corporations over the well-being of our citizens. Just enough of the serfs were allowed to get rich themselves, you see. What a clever sleight of hand prevailed.
In the richest nation on earth, roughly 40 percent of our citizens now have a hard time covering their basic costs, from food and health care to transportation and rent. Sixty-two percent of Americans cannot be deemed members of the middle class. Millions of Americans have to work at two or three low-wage jobs just to make ends meet. And in issues ranging from justice to education to health care to environmental protection, the underlying cancer of unbridled corporate influence on political campaigns is poisoning the very roots of our democracy.
Like addicts coming out of denial, no longer thinking that they can control their drinking or drugging, Americans need to get out of our denial regarding the depth of corruption that prevails within our political establishment. Such a moment of clarity can be frightening at first, but it’s also a moment when breakthroughs occur. It opens the mind to the possibility that there might be another way. And there is another way. That way is not to disparage our democracy, but to reclaim it, rebuild it, and return it to its deepest principles. It is ultimately our emotional connection to democracy, and our devotion to the possibilities it creates for the human race, that will empower us to save it.
How we got here
We can apply these same philosophical concepts to the student loan debt crisis in order to arrive at a truly progressive populist solution. But first, we must figure out how we ended up in this situation to understand who stands to gain from it. And make no mistake about it, there are people who stand to gain from the student loan debt crisis, just not you or me. The banks certainly stand to gain from this system as well as investors. Debt collection companies stand to gain from it, and, most of all, the government stands to gain from it. Ninety-two percent of student debt was held by the U.S. government as of Q4 2018 (source: U.S. Department of Education).
The Department of Education didn’t start administering federal student loans until the passage of Title IV of the Higher Education Act in 1965 (HEA). By the late 1980s, the federal student loan debt reached $10 billion – a staggering number at the time. By the 1990s, student loan debt was well on the rise, but the large debt boom we are experiencing really started around the turn of the century. As part of Obamacare, the federal government stopped insuring private bank loans and took on a larger role in lending directly to students. The idea behind this move was that it would help offset the costs of Obamacare.
Then, the recession hit. During the recession, the Federal Reserve kept the interest rates on these loans at relatively low levels. As a student, you could still borrow at a good rate. But by 2013, Congress was calling for lower interest rates. A large bank was capable of getting a loan from the Federal Reserve at a discounted rate of .75%. By the same token, a student loan carried an interest rate of 6.8%. In July 2013, Congress voted to reduce student loan interest rates, but they still remained relatively high compared to what banks paid. Today, interest rates on federal student loans range from 5% to 7.5%. Compare that with the average 30-year mortgage rate of 4.3% (source: Department of Education/Bankrate April 2019).
At the same time that all of this is going on, college tuition has continued to rise; the cost of higher education has increased, and state funding for that education has decreased. Over the past ten years, states have collectively scaled back annual funding for higher education by $9 billion (adjusted for inflation) (source: Center on Budget and Policy Priorities). What this reduced spending ultimately translates to for students is higher tuition (source: State Higher Education Executive Officers Association).
While there is no one progressive stance on the student loan debt crisis (progressiveness, by its very nature, is malleable and changes with the times in order to meet the needs of the people such as they are at any given moment), student loan forgiveness is currently at the heart of the progressive political agenda. Why is this the case? The issue is rooted in the perniciousness of student loan debt and how it affects the average American borrower, and indeed, the country as a whole.
Americans owe $1.57 trillion in student debt as of Q4 2018 (source: Federal Reserve Bank of St. Louis). That averages to $20,000 to $25,000 worth of debt for the typical borrower (source: Federal Reserve), but that amount is not evenly distributed. We are seeing students graduating from college with $40,000, $60,000, $100,000 worth of debt. Over 600,000 borrowers in the United States carry upwards of $200,000 worth of debt (source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax). In 2017, people over age 60 were carrying $85 billion in student debt that they took on in part to help their children or grandchildren fund their education (source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax).
When these students graduate from college, many are not seeing the earning bumps that should come with having a degree. As a result, many go into default status on their payments. As of 2017, $189 billion worth of student loans was either delinquent or in default status (source: New York Fed). To make matters worse, it is close to impossible to have student loan debt forgiven, even in bankruptcy cases. Given these facts and considering the high interest rates on these federal student loans, the case that the government is profiteering off students and their families is made stronger. The populist-progressive movement seeks to redress this.
Questions about the progressive political response to student loan debt
This brings us back to the question: how do you pay for it? The concern among conservatives is that the student debt that will be forgiven under a progressive policy like Warren’s will ultimately end up being paid for by the students anyway as taxpayers. The money must come from somewhere, after all. To counter this argument, progressives cite studies that illustrate how student debt forgiveness would likely be an economic stimulus. In February 2018, the Levy Institute published a study called “The Macroeconomic Effects of Student Debt Cancellation,” and it predicted a potential GDP boost of $86 to $108 billion by canceling all government-held student loans.
However, that is not the whole story. According to the Urban Institute’s Survey of Consumer Finances 2016, 34% of student loan debt is held by the top income quartile. It stands to reason that a policy of student loan debt forgiveness would benefit largely relatively affluent families. Furthermore, the students with the most debt are the ones with the highest earning potential. If the goal of a progressive politics around the issue of student loan debt is to help those with the most need and to boost the economy, then there are some legitimate questions as to whether loan forgiveness is the most efficient way to achieve that. Warren’s policy proposal caps debt relief for borrowers earning more than $250,000 in income.
The broader context
There is a broader context to all of this. The student loan debt crisis and the progressive response to the crisis must be understood within the full context of the state of education today and why access to education for every American is so important. Williamson’s campaign website states the following:
Education is more than a pathway to a better job; it is a gateway to a more empowered life. Good universal education is essential to democracy because it gives the tools to all citizens to think, and to act, with the power that is necessary for self-governance.
Without trained minds, we are less prepared for engaged citizenship. A more conscious sense of citizenship is imperative if we’re to right the ship of our democracy. Democracy bestows more than rights; it bestows responsibilities as well: the responsibility to understand what is happening to our country, to make carefully considered decisions regarding who we elect to represent us. Education gives us a greater ability to direct our own lives, and also to help direct the fate of our nation. Education is a form of empowerment, while under-education is a form of lock-out.
In this context, it becomes clear why an effective progressive address of the state of education in our country today not only includes student loan debt relief but also must include provisions to provide access to free or low-cost education for every qualified student. To address one without addressing the other is akin to slapping a little band-aid on a gaping wound.
A loving solution, a loving future…
Perhaps, it does all come back to love. But, what exactly is love in the progressive sense? It’s difficult to say exactly. Certainly, there is room within the progressive movement for a plurality of voices and ideas. Love encompasses a lot of things, and it manifests itself in a myriad of ways. It’s compassion, consideration, and looking out for your fellow man. It’s something that you know and recognize when you feel it, and that you know and recognize when it is absent. It can be easy to scoff at a politics based on the philosophy of love. In our cynical age, I would expect no less than a full-scale resistance to the power of this type of radical shift in thinking. But, what other choice do we have?
The student loan debt crisis is showing no signs of relenting. It will affect the growth of our economy. The injustice of large swaths of the population being blocked from obtaining a good education – an opportunity to reach their full potential in life and to create meaning for themselves and others – is an ongoing issue with no sign of relenting. It will affect our democracy; it already is. Love is the only answer. Love of people, love of your fellow man, love for the democratic principles on which this nation was founded.
With that philosophy comes an acceptance of the role that our government was instituted to fulfill: to secure the unalienable rights to life, liberty, and the pursuit of happiness for all Americans. That, I submit, is the defining element of a progressive politics. It is a politics of love, and with love comes fairness, equal opportunity, social and economic justice, and empowerment. The conversation is already begun.
What do you feel?
I’m a 32-year-old writer based out of San Antonio, Texas, with my own mountain of student loan debt to conquer. When I’m not working, I’m either out for a run on the trails or chilling at home with my rescue dog, Vincent (for Van Gogh, my favorite painter). I like to eat (a lot), read (I’m a real horror junkie, with Stephen King topping my list of favorite writers), watch movies (Titanic – yes, Titanic – is the be-all and end-all for me), drink wine (red only, please), travel (Italy has my heart and always will), collect crystals, meditate, and read tarot cards. Perpetually single, but a softie deep down, I try to stay true to my hippie heart and find the good in every person and situation. I remain curious and open to learning new things (except for math which, I am convinced, will always be my downfall). If I can answer any questions about my work here on student loan debt and repayment assistance programs, feel free to shoot me an email. I don’t bite (usually). [email protected]