ju·bi·lee: a clearance of debt from public records across a wide sector or a nation
Is College Worth It?
It’s the time of year when college admissions letters are received and financial aid awards are extended. When sorting through options, students and their families try to balance the advantages of one institution over another. The process includes determining what will be the best educational fit and which institution could lead to the best career. However, there is a 1.7 trillion dollar elephant in the room – student loan debt. This outstanding balance is held by almost 45 million borrowers and is $739 billion dollars more than the total amount of credit card debt.
In this respect, where to attend college is not just a decision about educational fit, personal growth, or social networking as the landing page to many university websites would indicate but is instead a cost-benefit analysis about the future. In America, going to college is a bet you place on yourself. You are betting that no matter what comes in the future you will be able to pay off a huge debt that can never be escaped through bankruptcy. In this respect, student loan debt has become one of the defining characteristics of social control in American society. Mark Fisher writes in his 2009 book Capitalist Realism that “there is a way in which the current education system both indebts and encloses students. Pay for your own exploitation, the logic insists – get into debt so you can get the same McJob you could have walked into if you’d left school at sixteen…”
What is euphemistically referred to as Financial Aid is better understood as a tax or rent that is enabled by the federal government and collected by private corporations? The majority of Americans who were not born into families with enough generational wealth to offset the price of admission to the “middle class” will likely take on these extra burdens. In 2021, what Americans call the middle-class could be defined as being socially privileged but in excessive amounts of debt. This is because the post-WWII social welfare programs that transferred wealth to white families, thereby creating the American middle class, no longer exist. Viewed through this lens, if you want to acquire membership to the club of people with economic stability, simply fill out your FAFSA and pay a monthly initiation fee for the majority of your adult life. Because student loan debt is nearly impossible to discharge for any reason, the question for many is not how long until the term of indenture ends. Instead, it’s, “How long can I tread water?”
The social and cultural pressure to enter the club begins in childhood. This narrative not only extols the virtues of a fulfilling life conferred by the degree but also derides the labor that does not require one. For many young people, the trades are not an option and the only way to avoid scraping together a meager wage by juggling multiple gig work apps is to earn a degree. How many of us have heard this trite line from a high school teacher? “If you don’t want to flip burgers for the rest of your life then you have to attend college.” The message is sent loud and clear – without a degree, you risk becoming invisible.
As one enters adulthood the diploma that is required to maintain economic relevance simultaneously manifests as the pernicious anxiety of entrapment. This newly acquired burden of “adulthood” functions as an economic control mechanism. The average payment of $300 per month is enough to delay marriage, having children, securing stable housing, or transferring jobs. Tiffany Konyen, an emerging Ph.D. candidate at CIIS and activist with Debt Collective notes that debt also changes a person’s psychology to that of the self-policing debtor whose shame is solitary – kept secret from parents and unknown by older generations. This is because debt is understood as a personal failure rather than the result of a predatory and rigged system.
The Politics of Debt
President Biden’s tepid response to the crisis is sometimes attributed to his long-standing connections with the financial industry in Delaware. For example, his previous actions helped make it almost impossible for borrowers to discharge student debt. Under the proposed plan, $10,000 dollars of debt would be “forgiven.” As if borrowers had made a mistake or done something wrong for attempting to acquire job skills. As a 2020 presidential candidate, he accepted $34,658 from student loan debt collection agencies. While a drop in the bucket of his campaign’s total fundraising, it was 60% more than his rival and far more than any other politician that cycle. As the highlight below shows, Biden not only does not understand the problem, he is dismissive of those who have significant student loan burdens due to no fault of their own.
New – Biden completely rejects Schumer/Warren proposal to cancel $50K of student loan debt per borrower:
“I will not make that happen."
Says he doesn't want to forgive debts of borrowers from elite schools — and money would be better spent on early childhood education. pic.twitter.com/oDwvCJveOm
— Michael Stratford (@mstratford) February 17, 2021
As NY-Representative Alexandria Ocasio-Cortez points out, where someone attends university does not matter and furthermore, discharging this debt does not mean that other programs cannot be paid for. In fact, the government has the ability to cancel student loan debt right now, if it really wanted to. This is how.
The legal authority to cancel student by executive authority is abundantly clear. pic.twitter.com/4AaE0WF3Eb
— The Debt Collective (@StrikeDebt) February 17, 2021
Public Universities Used to Be Free
The generational and racial divide created by student loan debt is the result of federal and state policies that have made the problem difficult for politicians of the dominant social order (older, more economically well-off whites) to understand because they do not live it. When they attended university in the 60s and 70s, public colleges were, for all intents and purposes, free.
The emerging neo-liberal order of the 1970s invented Financial Aid. As with many initiatives, numerous decisions over decades at both the state and federal level have coalesced into the higher education financing that we have today. Two are of particular importance. One factor is that conservative politicians of the era (and today) believed that colleges were institutions that were radicalizing the nation’s youth. As the Governor of California, Ronald Reagan once said, “Those there to agitate and not to study might think twice before they pay tuition… they might think twice how much they want to pay to carry a picket sign.” Removing direct funding for higher education was part of the backlash to the student rebellions of the 1960s and 70s and an attempt to punish student activists by harming every student.
In The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together, Heather McGhee details the other pernicious reason why student loan debt exists – racism. The work explores the zero sum logic of white supremacy culture and asserts that it acts to subvert the advancement of people of color even if this means making social goods less accessible for lower class whites too. McGhee’s research powerfully demonstrates how the rise in Financial Aid directly correlates with the increase of students of color attending university. She writes:
“Students of color comprised just one in six public college students in 1980, but they now make up over four in ten. Over this period of growth among students of color, ensuring college affordability fell out of favor with lawmakers. State legislatures began to dramatically cut what they spent per student on public colleges, even as the taxable income base in the state grew… By 2016, eighteen states were spending more on jails and prisons than they were on colleges and universities… By 2017, the majority of state colleges were relying on student tuition dollars for the majority of their expenses.”
Racism in America has resulted in vast economic disparities. For example, denying black GIs access to the GI Bill that enabled millions of white families to build generational wealth, the negative impact of college tuition disproportionally falls most heavily on black families. This can manifest in various ways such as having to borrow more to pay for expenses like books while economically well-off families don’t. She notes that:
“… Black young adults’ efforts at higher education and higher earnings aren’t putting much of a dent in the racial wealth gap. This generation was born too late for the free ride, and student loan repayment is making it even harder for Black graduates’ savings and assets to catch up. In fact, white high school dropouts have higher average household wealth than Black people who’ve graduated from college.”
The Debt That Keeps Accumulating
Borrowers with student debt are acutely aware of the perils of not being able to cover one’s monthly payments. It is true that programs such as Public Service Loan Forgiveness and Income Based Repayment offer some relief to borrowers. Under these plans, payments are made over a 10 or 25 year period with any remaining balance being discharged at the end of the term. However, when one is in these programs, the interest on loans that cannot be paid in full continues to build.
In these plans, a borrower can make payments on time every month and the result is dramatically more student loan debt than one began with. Two scenarios exemplify this:
- A borrower earns a degree and starts a job with a wage sufficient to cover the full payments. If that borrower loses that job and has to take another one for less income they can enter into income-driven repayment. However, if that individual finds employment a few years later that is sufficient to meet the basic payment, their student loans will be significantly higher than when they left school. In many cases, once someone has been in one of these programs for a few years it does not make economic sense to take a higher paying job because the total loan payment will be significantly higher and take longer to pay off. Essentially, you can become trapped.
- Very few people who apply for Public Service Loan Forgiveness are actually able to participate in the program or have their loan discharged after 120 monthly payments. A borrower might attend a more expensive college than they otherwise would hoping that they can take advantage of this program while benefiting from the education in the long run. However, of 54,000 applications to the program only 661 have been approved. As of 2018, only 96 borrowers have successfully completed the program.
- Student loans are the one type of loan in America that is almost impossible to discharge through bankruptcy.
- If a borrower goes into default on their loans a private collection agency is awarded the right to collect the principal and interest while also adding on a fee of 17.92% of the total loan amount (including accrued interest which is likely substantial at this point). People in this situation could have their wages garnished.
- The severity of student loan repayment is such that since 2015, 114,00 borrowers over the age of 50 have had Social Security benefits garnished to pay student loans that were taken out sometimes decades earlier.
Student Loans Are A Legal Extortion Racket Created By Politicians For The Benefit Of Financial Interests
What would happen if the 44 million Americans with student loan debt stopped paying? Nothing. Universities would not go bankrupt and the Federal Government would not take a loss. In fact, there is no evidence that the government makes any significant income from the interest on Financial Aid.
The COVID-19 pandemic proved this. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed, temporarily halting student loan payments and interest for all borrowers. The Biden Administration extended this measure until September 30, 2021. The reason that colleges did not close due to economic hardship is because they have already been paid by the government for the education that one received years ago.
The circuitous logic of Financial Aid is that the Federal Government currently pays upfront for the majority of all university costs. It is, therefore, no surprise that in the past 20 years alone in-state tuition fees for public universities nationwide have increased 212%. This far outpaces inflation and the actual ability of most students to pay off their loans with the wages that they will eventually earn. This “free money” has enabled universities to bloat their budgets with little oversight.
While some have argued that costs are rising because of new facilities and increased administrative fees. A different explanation is that America essentially has universal college education right now, albeit with a perverse twist. The federal government hands colleges whatever the institutions say they need to cover the cost of an individual’s education, thereby financing college for anyone who is accepted. However, the roundabout mechanism of Financial Aid results in the government’s abdication of responsibility to oversee what the institutions do with this money, thereby privatizing higher education – including public institutions. The result is that any student who is accepted to college is eligible for Financial Aid:
With the full knowledge that both the interest on the loan and inflated tuition fees relative to wage growth, combined with the inability to discharge the loans result in a situation whereby 44 million Americans and their families are living in a 21st-century debtors prison for doing what the entire educational system has encouraged them to do from K-12.
The only real winners are college administrators, construction companies that build college gymnasiums, and scandal-laden financial institutions like Navient and Nelnet. Both of these companies have the right to collect on student debt that the government creates and sells them to collect on the interest. Neither company has a fiduciary responsibility to student borrowers. This has resulted in situations where students are overcharged on interest and encouraged to enter repayment plans that actually increase their debt burden. Student loan collection agencies are allowed to bundle loans into Student Loan Asset-Backed Securities (SLABS) and trade them with other financial institutions similar to sub-prime home mortgages in the 2000s. They mix consistent borrowers with those facing financial hardship to mitigate risk and then collect as much as possible.
Debt collectors such as Navient and Nelnet are publicly traded and each pays quarterly dividends. This means that while debtors struggle to make ends meet, the expropriated funds are transferred upwards and added to shareholder portfolios every three months. In this light, Financial Aid is not a merit-based award for hard work in high school that will hopefully lead to a bright future. Instead, it is an award for each shareholder that the debtor pays as monthly rent for the right to work at a hopefully higher paying job.
Cancel Student Debt And Abolish Financial Aid
Financial Aid is a financial weapon created by the upper class’ culture of white supremacy to ensure the further entrenchment of America’s racial capitalist system. Financial Aid needs to be abolished because it:
- Effectively privatizes public universities,
- Has led to unchecked inflation at higher education institutions,
- Is a wealth transfer to debt collectors and investors excised disproportionately from BIPOC communities,
- Was invented specifically when BIPOC individuals began attending colleges in numbers large enough to frighten white people,
- Results in negative health outcomes such as suicide,
- Is a hefty never-ending rent for access to (hopefully) a higher wage that the upper-class does not pay.
- And harms everyone that was not born into generational wealth,
This system is designed to make the indefinitely renewable resource of knowledge and education scarce. With education being one of the primary indicators of social class that can be acquired rather than inherited at birth, it is clear that the only way to achieve universal higher education and alleviate this burden is to fight for it. On April 28, 2021 the Biden Administration made the case for 2 years of free community college through a convoluted system that does not include student debt cancelation. This is not good enough. On the same day, the Boston City Council passed a resolution urging the Biden Administration to cancel student debt, becoming the third city to do so after Philadelphia and Washington DC passed similar resolutions.
As NY-Representative Alexandria Ocasio-Cortez has pointed out, student debt cancelation will only be achieved if we organize and are engaged in struggle.
— The Debt Collective (@StrikeDebt) April 23, 2021
Youth DSA chapters are also mobilizing around the country and have a variety of ways to participate. The Center for Responsive Politics has compiled a list of politicians who have accepted campaign contributions from student loan debt collectors and you can check to see if your representatives accepted contributions from entities. You can also see who Nelnet, Navient and others are donating to. Then call your representative to ask that they return the these funds and cancel all student debt. If you live in the Bay Area, Nancy Pelosi and Barbara Lee both accepted funds from student loan debt collectors, albeit for fairly small amounts.
Every day, the momentum for student loan debt cancelation is building.
What would happen if the 44 million Americans woke up tomorrow and found out that their student loan debt had been canceled? Millions of Americans would have a taste of liberation from financial drudgery. They, along with their friends and families, would celebrate. Decades of racial injustice could begin a process of redress. The buffoonery of intentional economic self-sabotage invented by financiers and neo-liberal politicians becomes fiction. President Biden might feel a momentary embarrassment for backtracking but ultimately would be revered for this decision. You would be free of Nelnet, Navient, and the other predatory vampires that have been given the exclusive license to vacuum up 1.6 trillion dollars for no good reason.