The Politics Of Student Loan Debt: Perspectives From Policy Makers

The Politics Of Student Loan Debt: Perspectives From Policy Makers – Home – Meetings – Dig with Dignity: Solving the Student Loan Crisis and Honoring Meaning at the Margins

A Dignity + Debt Discussion Forum co-presented with the Aspen Institute’s Financial Security Program hosted at Princeton University

The Politics Of Student Loan Debt: Perspectives From Policy Makers

On October 18, 2019, the Dignity + Debt Network and the Financial Security Program at the Aspen Institute convened a discussion on the student loan crisis. The event was free and open to the public, and included journalists and other non-fiction writers, as well as sociologists, anthropologists, economists and representatives from think tanks and non-profit advocacy organizations.

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The meeting opened with reflections from Frederick Wherry, the Director of Dignity + Debt, on why student debt is central to the work of the Network: “In communities across the country and around the globe, parents are proud to announce that their son is going. to college. Where I grew up in South Carolina, it was more than an individual achievement. As a black child, I was told that education was the only thing that they could take it away. Everything else, including my life, was up for grabs. We sacrificed for self-esteem and respect. But we paid dearly for it.”

“As a black child, I was told that education was the only thing they could not take away. We sacrificed for self-esteem and respect. But we paid dearly for it.” -@ProfessorWherry Tweet

While most of the day focused on the US student loan crisis, the discussion included a panel that compared experiences with student loans and fees around the globe. Participants examined what led to the $1.5 trillion student loan debt crisis, an amount larger than auto loans or credit card debt. These examinations of what led to the debt and its consequences were followed by prescriptions for what to do. Most participants concluded that debt cancellation (which comes in many forms, as described in this report from the Aspen Institute) is possible and necessary. Tressie McMillan Cottom, the recently nominated National Book Award Finalist for Thick and author of Lower Ed, brought together the need for upstream and downstream reforms, noting: “Cancellation of student debt without education reform higher won’t work. And higher reform debt cancellation won’t work either.”

“Student debt cancellation without higher ed reform won’t work. And higher education reform without debt cancellation won’t work.” -@tressiemcphd Tweet

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Ida Rademacher from the Aspen Institute’s Financial Security Program noted that we need to harness data and go beyond it to trigger empathy and inspire moral outrage. She encouraged the group to keep in mind not only how to understand, but also how to explain and accelerate action.

“We need more to understand the problem of student debt. We have to be better at explaining and accelerating the action.” – @idarademacher Tweet

And Alondra Nelson, president of the Social Science Research Council, reminded everyone that the SSRC began in 1923 with the progressive belief that social science can do good in the world, and the Dignity + Debt Network lives this alternating mission between institutions and individuals, the historical context and the dynamics of human agency. Only by going across and beyond disciplines and countries will we meet these challenges head on.

For some loans in the United States, there is no crisis. For the majority, however, there seems to be no end to their sacrifice. Charlie Eaton noted that due to an expansion of loans since the reauthorization of the Higher Education Act of 1992, student debt has increased both in the total amount of debt and in the burden of the debt per student. At the same time, per-student cuts from state legislatures and the federal government have required students to shoulder a greater share of the rising costs of education. Today, college is rarely debt-free except for those from wealthy families who make up a disproportionate share of students at elite private institutions. Also helped by the wealth of their schools’ endowments, only 21 percent of students take out loans throughout their first year at the 20 most selective private colleges. Throughout the rest of the higher education system, most students now leave school with the disadvantages of debt. Educational debt is especially crushing for low-income students and students of color who have been targeted by for-profit colleges. In a system where the richest 10 percent of colleges can protect their students from debt, but the bottom 90 percent cannot, student debt has become a new system of stratification.”

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“In a system where the richest 10 percent of colleges can protect their students from student debt, but the bottom 90 percent cannot, student loans have created a new system of stratification.” – @CharlieEatonPhD Tweet

The JP Morgan Chase Institute has published a report on the 4.5 million people with Chase bank accounts that pay for tuition. Fiona Greig, the Director of Consumer Research at the JPMC Institute, explained that low-income families are less likely to make consistent payments on student loans and that the data suggests that there is a need for payment relief. Other work the Institute has done on income volatility suggests that eligibility for that relief should be dynamic and calculated on a short-term basis.

“After reviewing 4.5 million checking accounts of families making tuition payments, I can say that the data suggests that there is a need for payment relief. Eligibility for that relief should be dynamic and calculated on a short term.” -@FionaGreigDC Tweet

According to Jason Houle and Fenaba Addo, other data sources indicate that there are two student loan realities, a bimodal distribution. Houle explained: “We see that student debt is a crisis for black and brown borrowers, but it is less so for white borrowers. In fact, the racial disparities are much greater than the disparities of social class of origin; the black students leave college with nearly double the debt of white students; and default rates are nearly three times higher for black students than white students. The default rate increases dramatically 10-15 years out of college.” .

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Complicating the story is the discovery that wealth is lower for Black families, but still does not protect blacks as much as their white counterparts from debt. Addo noted, “Affluent kids are more likely to attend and graduate from college and end up with less debt, but when you factor in race, that relationship doesn’t hold for black families.” Addo also explained that black college graduates have higher rates of unemployment and underemployment and that they pay off their debts at a slower rate, other things being equal.

“Wealthy kids are more likely to attend and graduate from college and end up with less debt, but when you take race into account, this relationship doesn’t hold for black families.” -@FenabaAddo TweetWhat are others doing?

Looking at higher education funding around the world can provide some lessons for how we in the United States could improve our system. Jonathan Marcus, the higher education editor for the Hechinger Report, explained that his organization is a nonprofit that was created in response to the inability of major publications to cover education. He traveled the world, looking at the experiences of Australia, Germany, Denmark, Chile, Norway, Iceland, South Africa and a number of other countries. In other countries, there are powerful national student unions. There are also some surprises. Even where the university is “free”, its adoption is not always high. As a journalist not based in these countries, Marcus relies on in-country expertise as he tries to translate his experiences into lessons for a US reading public.

Rekgotsofetse Chikane went into detail about the South African case. As a student leader in the #FeesMustFall movement, he found himself taken to court on charges of treason because he and others stormed Parliament, demanding the government honor the equality promises made in 1994. Ironically, his father was accused of treason thirty years before. to protest Apartheid. Chicane’s book about the #FeesMustFall movement is now short-listed for South Africa’s Patton Prize.

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“It doesn’t make much sense to tell people that the only way out of poverty is a college degree, but the reason they can’t finish classes is because they can’t pay the fees.”-@Kgotsi_Chikane Tweet

Debts and fees get a different response from borrowers depending on how the debts are structured and where the borrowers live. Lorena Pérez-Roa observed how student debtors in Montreal are different from those she interviewed in Santiago. In the first, students saw the problem as one of individual responsibility and most family members did not know their debt burdens. In the end, the structure of the debt is what made it impossible to repay. Debts involve family members because they are structured to require co-signers. In Chile, students saw themselves as victims of a flawed system and could clearly point to the political regime as guilty.

Felipe González-López explained that in Chile, they have changed the conversation about debt, transforming it from an individual decision to a collective condition. They changed, “You are not a loan!” And at the public meetings, they structured the meetings to play a therapeutic role to shift the blame from the debtors to the structures that burden them and the politicians who keep these structures in place.

“Remember: ‘You are not a borrower!'” Stop talking about individual responsibility and start talking about how loans have been structured to be almost impossible.

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