Legislature must act on the crushing burden of student debt
The Covid-19 global pandemic, which in the US has, so far, infected 70 million Americans and caused 900,000 deaths, was also the cause of dramatic economic upheaval. Statistics reporting the biggest US GDP contraction since 1946 underscore the direct impact on people’s lives: loss of income, food scarcity, delays getting medical care, and housing insecurities. These conditions are significantly exacerbated for the more than 45 million Americans burdened by onerous student debt totaling $ 1.7 trillion, the second-largest debt in the USA after mortgages, and the only debt in the USA that cannot be discharged in bankruptcy. An old corrupt higher education financial complex that 20 years ago consolidated the power of the federal government, the colleges and universities lobby and the student loan servicer/collectors to pass the cost of higher education to your families in the form of loans with the promise of upper mobility that was seldom realized for Black, brown and low-income communities.
In the case of Massachusetts, our state left many students and families financing, de facto, Massachusetts’s disinvestment in postsecondary education over the last 20 years.
Today at 4 p.m., hundreds of Massachusetts youth, families, community-based organizations, activists, and allies will gather at the steps of the State House to join thousands of people in Washington D.C. and nationwide to call on President Biden to cancel student debt.
Coincidentally, also today, the Massachusetts Joint Committee on Education will decide whether or not to vote favorably out of committee the Debt Free Act (Bill H.1339, S.829), which would create a tuition-free public post-secondary system for all, with a grant program to cover other costs for low-income students — as determined by Pell Grant income eligibility — such as room and board, food, transportation and books and supplies.
Our Massachusetts legislators have an opportunity today to take bold and courageous action and do the right thing. So do President Joe Bident and Vice President Kamala Harris.
The current student debt crisis is not the product of chance or the unfortunate unfolding of 45 million poor financial decisions, but rather the severe consequence of political decisions taken at the state and national level that included a decrease in the funding of public universities and the offer of student loans instead of the educational grants previously available to middle and low-income students. Not surprisingly, many predatory and for-profit financial institutions took the opportunity to invest in the unregulated higher education market. Since the 1980s, the cost of an undergraduate degree has increased by a shocking 213% at public schools, and 129% at private schools.
Additionally, many foundations and universities endowments benefited tremendously from their investments in the “student loans Wall Street bonanza” of the last 20 years. Interestingly foundations and colleges and universities, strong members of the business community, as well as the Massachusetts Board of Higher Education have been pretty silent about the student debt crisis and have offered little support to students, families, and communities organizing for the cancellation of student debt and a high-quality public and debt-free higher education system worthy of Massachusetts.
In recognition of the student debt crisis, candidate Biden promised to provide relief to those burdened by federal student debt and offered to cancel $10,000 per borrower and remove the total burden of those attending public and historically Black colleges and universities. Unfortunately, as president, he has only managed to follow the lead of his predecessor and, under pressure, suspend student loan payments until May 1, 2022.
There is pressure, however, coming from many places, to provide an appropriate response to the national student debt crisis. First of all, there is the demand, coming from unions of borrowers and advocates, to cancel all student debt. And just last December Rep. Ayanna Pressley, Senator Warren, and Chuck Schumer sent a letter to President Biden encouraging him to use an executive order to cancel up to $50,000 of federal student debt.
More recently, Rep. Pressley spoke on the House floor to bring attention to the way the student debt crisis, like many other challenges faced by our society, is not evenly distributed but has disproportionately affected the Black community. In fact, the impact of the debt crisis has been distinctly felt across gender and ethnicity: Two-thirds of student debt is owed by women and Black women have the largest student debt burdens of any demographic.
It’s because of this understanding of how the student debt crisis is affecting minority communities, that Rep. Pressley and the many organizations advocating for the complete cancellation of the debt consider this an issue of racial and economic justice. And the cancellation of the debt could have an immediate impact: According to the Roosevelt Institute, this action would immediately increase the wealth of Black Americans by 40%.
Debt cancellation could be a boost not only for Black graduates but the economy as a whole. Research by the Federal Reserve and the Levy Economics Institute shows that the removal of these financial burdens would increase the buying power at local levels and help spur an economic recovery, possibly increasing GDP by over $86 billion and creating over 1 million new jobs annually.
The obvious benefits that the student debt cancellation could bring to our battered American economy would suggest that this should be an easy choice for a Democratic president facing sagging approval ratings and to a party confronting challenging odds during the upcoming midterm elections. This is, in fact, so much the case, that a recent Boston Globe opinion piece poignantly wondered “What’s Biden waiting for?”
By all measures then, it’s clear that canceling the national student debt is the right thing to do. But just canceling the debt, however, leaves untouched the underlying causes of the current crisis, at a time when borrowers and their advocates are realizing the systemic nature of the problem. Just like a holistic response to the pandemic may require rethinking our national health system, an appropriate response to the student debt crisis would require rethinking our educational system and the push for a full educational reform.
As a society, we need to see education as a collective good and a good social investment. According to Dr. Beth Akers, resident scholar at the American Enterprise Institute, as a nation we have decided to socialize public education up to K-12. “Ultimately, it comes down to when we make the switch from a socialized system to a market-based system,” said Akers.
And the switch cannot be more dramatic: According to the Pew Research Center, over two-thirds of all higher education students are now taking out loans to meet the rising cost of tuition. Education Data found that the average loan amount has tripled since 1993, to over $30,000. And, according to the Economic Policy Institute, the Black and white wage gap is worsening.
As a society, we need to understand that the burden of educating its members should be assumed by society at large and not fall on the shoulders of the most vulnerable among us. This reorientation of priorities would necessitate not only returning to the system of educational finance dependent on grants, as opposed to loans but the wholesale elimination of the financing of education through loans.
To be sure, the Debt Free Act is not the only piece of pending legislation that aims to respond to the current crisis, and there are more than a few bright new ideas that can bring into focus a few more creative solutions. What is clear is that now seems to be the right time for canceling the national student debt and voting the Massachusetts Debt Free Act, Bill H.1339/S.829 favorably out of committee today!