Reprinted from Left Wing Nation by Justin Rosario
As the New York Times put it, there’s “A Quiet Revolution in Helping Lift the Burden of Student Debt“. We are slowly erasing billions in student debt and adding that loss to the deficit. Well it’s about damn time. We have over one TRILLION dollars in student debt and it’s crippled an entire generation of graduates while simultaneously pricing out millions of the working poor from bettering themselves through a solid education.
One of the dirty little secrets we don’t like to talk about is how higher education used to be insanely cheap. A person could go to college, work a part time job to pay for it and graduate without much of a debt if they even had one at all. We used to understand that having as many people as possible with a college education was in the best interest of America.
But Ronald Reagan and his politics of greed did away with that. Now it costs over $10,000 a year at public universities and that’s just tuition. Never mind if you want to live on campus! As far as Republicans were concerned, affordable higher education wasn’t for the filthy peasants and burdening them with massive debt was an excellent way to keep them powerless and complaint.
And so an entire generation of students is currently trapped by debt. It’s incredibly difficult to declare bankruptcy and lose the loan meaning that even if they can’t find a good paying job in a lousy market, graduates are forced to devote much of their salary to paying it off. That stops them from buying a home or starting a family on their own terms. Even worse, it saps their innovation because it’s hard to take a risk on opening a new business when you have to worry about paying your loan. And what bank will risk a business loan on someone laboring under tens of thousands of dollars in debt already?
The student loan debt crisis is crippling graduates while making a handful of companies obscenely rich. This is just the way Republicans and their corporate masters like it. It keeps the riffraff either uneducated or subdued.
Now, though, President Obama (with an assist from President Bush. For real!) has made college loans affordable and removed the long term burden. Sure, we’re going to pay for it as a country instead of choking graduates to death with debt but, as I said, it will be worth every penny.
To understand how we’re forgiving debt, you have to understand what Income Based Repayment is:
I.B.R. limits monthly loan payments to as little as 10 percent of a borrower’s income, after deductions for living expenses, and forgives any remaining loan balances after 20 years. People who work in nonprofit and public-sector jobs get an even better deal, with forgiveness after 10 years.
When my wife, who works for the federal government, first told me about this, my first reaction was: “Bullshit.” No one is going to just forgive $50,000 in loans. But the more we looked into it, the more realized that’s exactly what it is: loan forgiveness through the government.
IBR was originally passed in 2007 (292-97 in the House, 79-12 in the Senate) and signed by President Bush so it was very bipartisan. That was back when we actually got things done in Congress. Private loan companies squealed because it reduced the amount of sweet sweet tax payer money they could leech off of us. Boo hoo.
The way the system used to work was that private loan companies like Sallie Mae would give out loans to students using government money. Then Sallie Mae would keep all of the interest and pay back just the original amount of the loan to the government. Also, if the loan went into default, it didn’t cost Sallie Mae a penny.
If you’re thinking that Sallie Mae was a completely unnecessary parasitic middle man, you shouldn’t be surprised that President Obama had the same thought in 2010 when he ended the entire subsidy program by quietly tucking college loan reform into the Affordable Care Act. Republicans were furious but were too busy having a stroke about Obamacare to do anything about it. Also, it was simply impossible to defend the old system in any rational way.
So what does all this mean? It means that students can go to college and not be crushed under enormous loan debt for the next 40 years. The difference this will make to the country is hard to overstate. Over the next decade or so, we’re going to see a resurgence of entrepreneurship from recent graduates. They won’t be forced to move back home with their parents and will be able to start their families or businesses or both years earlier.
Additionally, more people will seek higher education because it’s still the best way to move up the economic ladder and that will benefit the working poor for whom college has been completely out of reach.
The status quo of misery is quietly being upended and it won’t be much longer until the powers that be start attacking student debt forgiveness in force. Good luck with that.