Pieces like this almost always start with someone’s student debt story. Here’s a person who wanted to go to college — they’d always dreamed of a career that required it, or they had just internalized the idea that college was the only route to success. Their parents hadn’t saved enough to cover the costs, but when they filled out their FAFSA, a solution to their problems presented itself: an abundance of student loans, no questions asked. It was a no-brainer! College was the way to a better future, and student loans were what you needed for college.
That’s the first act of the story. In the second act, the student has graduated from college. Maybe they struggled to find a job, and convinced themselves that the real route was grad school. They took out more loans for law school, or med school, or architecture school; maybe they figured out they wanted to teach, and needed to get a master’s degree to do so. Someone might have told them about the Public Service Loan Forgiveness program: If they spent a decade, post-graduation, working in a field that qualified as public service and made regular, income-based repayments on their loans, the rest of the balance would be forgiven.
Then there’s the third act, which sets in anywhere from two to 10 years after graduation, when the enormity of their accumulated student debt becomes clear. Maybe they’re on an income-driven repayment plan, but the calculation doesn’t take cost of living into account and they’re struggling to cover their bills, even while living with friends or a partner. Their debt eats their ability to save: for retirement, for a down payment on a house, for their kids’ college, for potential catastrophe.
Maybe they get laid off and are forced to go into forbearance, with their payments on pause, but the interest just keeps accruing. They try to sort out their various loans and how to start paying a bit more, but every call to the loan servicer is another nightmare. They’re embarrassed and ashamed and don’t feel like they can talk to their friends or parents about it, so they spend hours on Reddit reading stories of people who’ve been paying off their loans for years and somehow still owe the same amount as when they graduated, if not more. They get up the courage to really study the details of their own payments and realize the same is true for them. They’ve spent five years scraping and struggling and the number’s somehow only gone up.
Maybe in 25 years, if they’re still on an income-driven repayment plan, the remainder of their debt will be forgiven. But even that might not happen. 2019 was the first year borrowers who enrolled in an income-driven plan in the 1990s became eligible to apply for forgiveness. A recent FOIA request showed that as of November 2019, fewer than 20 people had received forgiveness. (The number was recently revised to 32.) Every day, they feel more and more like their loans will be with them forever.
Usually, these stories are fleshed out with specific details: where the person grew up, what they studied, the job they’ve found today, quotes that attempt to describe the disillusionment, regret, and anxiety that have accumulated around their student debt. That’s exactly what I did the last time I wrote about student debt. It’s a common journalistic technique, with good reason. It encourages readers to relate and sympathize; it makes them care about something they might not otherwise, or allows them to see their own experience as a shared one.
This device is most effective when people are first learning about a societal problem, or the problem itself is new. In the past year alone, it’s been the way that the effects of Covid-19 — on the body, on the family, on children, on the most vulnerable — have become vivid, despite our enforced distance from each other. But there comes a point when these stories, no matter how affecting, inadvertently keep the struggle in the realm of the individual. The problem presents as personal, instead of a societal failure that demands redress.
When the problem remains individual, so too do the solutions. Examine someone’s student loan journey from the outside, and you can find numerous places where you’d have advised them to take a different turn. To anyone with student debt, all of these arguments will be familiar: You should’ve read the fine print. You should’ve picked a different major. You should’ve looked up the graduation rates of that college. You should have consolidated. You shouldn’t have consolidated. You should’ve understood compounding interest. You shouldn’t have gone to grad school. You should’ve called your loan servicer and sat on hold for an hour every day until you got this sorted out. You should have survived on rice and beans. You should’ve taken a second, or third, or fourth job. You should’ve lived a completely different life, and made completely different decisions. Maybe then you wouldn’t have this debt.
You might hear these arguments on Twitter, from your friend’s dad who has thought about the issue for 10 minutes before arriving at an immovable position, and from politicians who use them as the explicit and implicit rationale for not granting loan forgiveness. Sometimes they’re cloaked in policy language of means testing and “fairness”; often they conjure an imaginary college graduate who would benefit from forgiveness but shouldn’t. Which is precisely what happened last week, when President Joe Biden rejected a town hall attendee’s call for $50,000 or more in debt forgiveness, stating that he was unwilling to grant relief “for people who have gone to Harvard and Yale and Penn.” (An estimated 0.3 percent of borrowers attended Ivy League colleges.)
Biden would like public colleges to be tuition-free for families making $125,000 or less, and community colleges to be free for all. Those are admirable beginnings of a holistic plan for affordable college moving forward, but his proposal to forgive just $10,000 in student debt — and try to repair income-driven repayment programs, particularly for those in public service — reproduces the same fundamental misunderstanding of the problem.
“We’re drowning in the technical details and neglecting the core moral argument,” Frederick Wherry, a professor of sociology at Princeton University and the director of the Dignity and Debt Network, told me. Student loans have failed to serve their original function, instead working to hollow out the middle class or prevent access to it altogether. Substantive — if not wholescale — student loan cancellation offers an opportunity to not only acknowledge how the program has misled millions of Americans but to begin the long process of restoring access, solidity, and racial equity to the middle class. None of that can happen if we keep focusing on individual scenarios.
“There are so many dead-end conversations that we can continue to have about student debt,” Louise Seamster, a sociologist at the University of Iowa who studies race and inequity, explains. “So we have to ask ourselves, how can we talk about this differently?”
The federal student loans program was conceptualized as an equalizer, a way to allow people without financial stability to take out small amounts with low-interest or even subsidized loans, to get their foot in the door of the American dream. For millions of Americans, it made college not just accessible but imaginable. The idea was simple, and not unlike an investment in, say, a home. Whatever money you took out to cover the cost of college, whatever interest you ended up paying on the loan as you paid it off, all of it would be eclipsed by a so-called diploma bump. Sure, you were paying off debt. But you were also making a lot more money than you would have without that degree.
For years, this has been the animating theory of American student loans. They’re not a shortcut to the middle class or a cheat code, but a high-stakes workaround, a back route, a way to give yourself the bootstraps so you can actually pull yourself up by them. A half-century into this student debt experiment, we need to face a new reality. For millions of Americans, the back route has led them far, far astray.
Part of the problem, according to Seamster, is that the student loan program was intended as a wealth-building program. Like previous wealth-building programs — the mortgage assistance programs in the 1930s and the GI Bill — its beneficiaries were primarily white. Over the course of the postwar period, the white middle class expanded and solidified in part through attendance at robustly funded public institutions, with federally backed loans helping to cover the still relatively low tuition.
This path to the middle class was in place just long enough for it to seem secure: get into college, get a job, buy a house, watch your wealth grow, and then pass it along to your kids. But this was only really a safe bet if you were a white man, and when women and people of color began down the path in greater numbers, the government and taxpayers essentially stopped paying for its maintenance.
“For generations, people went to college and got the benefit of a middle-class lifestyle without paying a tax on getting there,” Seth Frotman, the executive director of the Student Borrower Protection Center, told me. “But we put that notion away when the people who started going to school stopped looking like me, a white guy.”
Students were still encouraged to take out loans, but massive cuts to public higher education — and skyrocketing tuition costs at public and private institutions competing to provide the “college experience” — meant that students have to take out more and more of them. We’ve lost sight of public institutions, Seamster says, and the very idea that we all deserve them. For decades, these institutions were venerated and well-funded, but as soon as women and people of color gained more access — even took over as the majority of those accessing those institutions — we began to devalue them, or defund them altogether, shifting the cost burden onto the individual.
But it’s not just the toll to get on the path to the middle class that’s changed. The destination did as well. When accounting for inflation, wages are stagnant or even down, yet student loan burdens keep increasing. An undergraduate degree is no longer enough to distinguish yourself, so it’s easy to be convinced that the real advantage is, yet again, right over there, within your reach, at the end of grad school — and you take out even more loans. But the pay bump doesn’t always materialize, and the loan amount keeps accumulating.
“It’s like the ball keeps moving under a different cup,” Seamster says. “We convince ourselves that it’s fine, because not all the people are having problems repaying, but that’s because they’re repaying over longer periods of time. Or we say that it’ll be okay because they’ll eventually have their loans forgiven, but that’s not happening either — not with Public Service Loan Forgiveness, and it’s very unclear what’s going to happen with income-driven repayment.”
In other words: The solutions are broken, too. For the past 10 years, the “solution” to the problem has been to try to fix the existing system. Get people onto payment plans they can afford, enroll them in Public Service Loan Forgiveness, do more to regulate predatory for-profit colleges. Those attempts are simply no match for the enormity of the problem.
In 2017, for example, only 1 percent of applicants for public service loan forgiveness were approved; as of November 2020, after dozens of articles concerning the way the program had actively misled its participants and mishandled applications, 6,493 out of 269,611 applications had been approved. That’s 2.4 percent. Persis Yu, the director of the Student Loan Borrower Assistance Project who filed the FOIA request to release data on the number of borrowers who’d received forgiveness under an IDR plan, sees the “shockingly low rate of cancellation” as “emblematic of the failure of the Department’s IDR programs to deliver the relief Congress intended for struggling borrowers.”
It’s hard to internalize just how badly these programs have failed when so many voices keep telling you that they’re the only path to future stability. The US government has spent decades selling its citizens on the idea that debt — whether in the form of a house or a college degree — always produces a positive return. That accepted wisdom is simply not true for everyone. “A lot of people have used debt as a way to gamble on your future,” Seamster explains. “They don’t understand that you’re so much more likely to succeed in that gamble if you’re white. We only have one set of financial literacy advice, one set of basic financial advice, one supposedly stable understanding of how money works — and it’s a white understanding.”
“It’s one thing when you finish school and you can see your debt going down,” Wherry told me. “It’s quite another when you finish and the interest and your ability to pay means that it just keeps going up. Those are the realities that no one tells you about as a senior in college. And they definitely don’t say, ‘Hey, for our Black students here, about five years after you graduate, you’re going to owe $50,000, even though you finished with $26,000, and that’s going to be half of what your white counterparts owe.’”
Over the past 30 years, more and more Black, Latino, and Indigenous people have attempted to get on that student-loan-facilitated path to the middle class. When they struggle to reap the same wealth-building function from their loans as previous generations of students, the blame and debt load falls on the individual. Instead of closing the racial wealth gap, student loans are in fact exacerbating it — and have been doing so for some time.
In the most recent, comprehensive study looking at debt and race, 90 percent of Black students and 72 percent of Latino students finish their four-year undergraduate programs with debt, compared with 66 percent of white students. Even when you account for degree, college GPA, job, and salary after college, Black borrowers are still 11 percent more likely to default on their loans than white borrowers. In 2018, 41 percent of Native borrowers had defaulted on their loans, compared to 22 percent of white borrowers. And in 2019, the default rate for student loans was 13 percent in Latino-majority zip codes, compared to 9 percent in white-majority zip codes. (Asian American students from low- and moderate-income homes are 40 percent less likely than white students to take out loans, and are less likely than white borrowers to default on their loans.)
For some borrowers, student loans have made middle-class salaries more accessible, but middle-class salaries simply do not go as far as they once did, in part because of the debt loads now necessary for many to achieve them. For others, the legacy of their student loans has been to shut them out of the middle class entirely, miring them or their extended family in the financial quagmire of default and its long-reaching consequences. This is especially true for students of for-profit colleges, which at their peak in 2010 were attracting more than 2.4 million students a year. In 2017, when public and private nonprofit colleges were enrolling twice as many white students as students of color, they made up more than half of the enrollment at for-profits.
That statistic could be framed as potentially heartening, if not for the fact that for-profit colleges leave so many of its attendees on significantly worse financial footing than before they enrolled.
As Tressie McMillan Cottom, author of Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy, explains, these institutions “target and thrive off inequality.” The overall for-profit retention rate is only 25 percent, which means that many students take out loans for degrees they never complete. Almost 60 percent of Black students who took out loans to attend a for-profit college in 2004 had defaulted by 2016. One 2016 study from the National Bureau of Economic Research found that graduates of for-profit colleges ultimately fare worse economically than if they hadn’t gone to college at all.
The promise of what higher education can offer is broken. Even if you personally have paid off your loans, or your child or friend didn’t have to take them out, that does not change the fundamental truth. You cannot look at the statistic that nearly 45 million Americans now have student debt — with an average debt of $36,214 — and think otherwise.
The only solution is student loan forgiveness, which could theoretically be achieved through executive action or legislative resolution. (You can find a detailed overview of how it could take place, and to what extent, here). A Vox/Data for Progress poll asked likely voters about their support for forgiving $50,000 of debt for people making less than $125,000 a year. Just 43 percent of those without student debt supported forgiveness, but that grew to 71 percent of those with less than $50,000 in debt and 90 percent of those with more than $50,000 in debt. You might interpret the rising support in a simplistic way; of course people with debt would like it to go away. Or you might realize that those with student debt understand the extent, and weight, of the crisis in a way that those without debt simply cannot.
Part of the problem is how much of the struggle around student debt remains invisible — due, at least in part, to the shameful connotations of unmanageable debt and default, combined with the compunction to outwardly perform or aspire to middle-class stability. We often conceive of student debt as a singular burden, but it is always combined with all the other costs of American life: housing, child care, elder care, medical costs, lingering credit card debt. Whether it’s a $4,000 loan taken out to cover living expenses during a summer internship that balloons into $20,000, or $200,000 in total law school debt for a pair of nonprofit attorneys, the student loan payment is one of several escalating costs that make it harder and harder to make ends meet.
“Student loan people are always trying to think about how we can make the loans easier to pay,” Frotman, of the Student Borrower Protection Center, told me. “They’re not thinking about how those loans intersect with all the other bills and all these different financial responsibilities that the borrowers of this generation have been asked to bear.” They’re not thinking of the monthly payment, in other words, in concert with the massive shifts in retirement plans, or the escalating costs of child care, or the way that individuals have been asked to shoulder more of the premiums and copays for medical care.
“People can claw and scrape by and kind of make it work, as long as literally everything goes fine in their lives,” Frotman says. “They can cobble together the child care costs, enough to cover the routine medical debt and the rent. But if anything happens — if you lose your job, if you have a child with special needs, if you go through a natural disaster, if there’s a pandemic — that’s where, for millions of Americans, it all starts to spiral out of control. The student loan debt, it just pushes them over the top.” That’s especially true, Frotman says, for people with private student loan debt. (Public loans are loans made by the federal government and make up around 90 percent of all student loans; they have fixed interest rates and the ability to enroll in income-driven repayment plans. Private loans are made through banks, credit unions, or individual schools, are often at higher rates, and are more difficult to defer.)
For the majority of borrowers with federal loans, the “pause” on loan payments and interest over the past year has been essential. It’s allowed those who were laid off to avoid forbearance or default, provided excess funds to cover unanticipated pandemic-related costs, and helped save the economy from free fall. But the pause has just kicked the can further down the road. Previous data shows that “restarts” after loan pauses for natural disasters — like, say, after a hurricane — lead to spikes in delinquencies and defaults. The problem will only continue to metastasize. “We cannot ask 40 million people to go back into the system that was there last March,” Frotman says. “What more and more people are realizing is that you cannot create a functioning student loan system unless you cancel very real amounts of debt. The Biden people know this, or they will know this very soon.”
The effects spread far beyond monthly bills. For so many borrowers, striving to maintain the precarious balance and avoid catastrophe has a high, but often hidden, cost. “You thought the debt was a resource, but the debt starts driving you,” Seamster explains. The actual payment amount ultimately matters less than what it pushes out of reach: the money you’re unable to save, the jobs and business ideas you’re unable to pursue, the health care you’re unable to seek, the risks you’re unable to take. Millennials are starting far fewer businesses than previous generations, have far less in savings, and are moving less. In 2014, 39 percent of people over the age of 60 with student loan debt — often taken out for their children or grandchildren — reported forgoing necessary medical care.
That’s the reality of student debt. It’s most often associated with millennials, but debt loads are absorbed up and down families, across generations and communities. In 2018, “Parent PLUS” loans made up about 6 percent of all public student loans; between 1990 and 2014, the average amount parents borrowed increased threefold, to $16,100 a year. A JPMorgan Chase study of nearly 4 million “primary” accounts making regular student loan payments found that the typical family’s student loan payment is 5.5 percent of their take-home pay, but one in four families allocate more than 11 percent of their take-home income to student loan payments.
Those loans could be funding the education of the account’s primary owners, but they might also be helping to cover the loans of a child, a sibling, or even a parent. Bit by bit, student loans draw on a family’s “reservoir” of available funds — and, for low-income families, often drain it altogether. This not only makes it more difficult for the family, as a whole, to accumulate wealth, but also creates scenarios that demand even more debt. If a family has to stop payments on a loan, it keeps acquiring interest; if they don’t have a reservoir to cover an emergency medical expense or car problem, they resort to credit cards or payday loans, often with astronomical interest rates. And saving for the next generation’s college costs is out of the question. The education that promised to lift a generation into the middle class instead weighs down the entire extended family.
You can see how this cycle continues. Families and communities with high rates of debt and default remain just as indebted, and just as constrained by their debt, if not more so, while those without it create scenarios that allow their children to graduate without debt as well. The middle class as a stable, lived reality will continue to disappear, as those without student debt set the mortar for their family’s future financial health, while those locked in the cycle of student debt scramble to put together new sticks for the roof every season. This trajectory is by no means race-neutral. The statistics are clear: There are myriad reasons white families have a median net worth nearly eight times that of Black families and five times that of Latinx families, but one of the reasons the racial wealth gap persists is the disproportionate burden of student loans on Black and Latinx borrowers.
If your first response to full cancellation is that it would help some people who “don’t need it,” start thinking of who’d actually benefit most: the Black, Latino, and Indigenous borrowers whose debt burden eclipses that of their white classmates. We often use the word “disproportionate” to describe something unfair. But in this case, the disproportionate benefit would be a form of repair, a correction, a rebalancing of wealth toward fairness for the communities who’ve been implicitly and explicitly excluded from it.
If we don’t act, the racial inequalities will only get worse. “We have these debates about racial equity,” Wherry told me. “But we’re not taking the time to ask, if we care about this set of outcomes, then how do we actually change those outcomes? People say to themselves, ‘Well, this isn’t how it’s supposed to be, and that’s not how I think it should be, and that’s not how my friends think it should be.’ It’s beyond their comprehension that you can not actively be racist and still contribute to these systems.”
When you insist on not seeing the student loan system in its current iteration as a driver of race-based economic inequality, you are perpetuating it. “People still have this assumption that things are getting better and better when it comes to inequality, and that narrative is more powerful than the actual facts,” Seamster says. “If you look at the actual facts, instead of this myth of what America is, we would have a very different picture of the racial hierarchy in this country.”
In order to correct that racial hierarchy, we need to be honest about its causes, including the notion of personally funded higher education as a means of wealth building. And after we cancel student debt, we need to start thinking about the ways to prevent the debt from simply re-accumulating with a new generation of borrowers. Part of that work is, yet again, refusing to see the situation as the result of personal decisions or failings. “The question cannot be how are individual students going to pay for college, but how we, as a society, are going to fund public education,” Seamster says. “It cannot be who is paying for this person to attend, but who is paying for the school.”
We cannot punish borrowers for buying into a dream when no one dared admit its promises had expired. This must be the drumbeat of the call to erase student debt: It’s not about my loans, or your loans, or your lack thereof. It’s not about your personal stories or anyone else’s. It’s about restoring the path from education to financial stability and wealth building — and, this time, actually maintaining it, no matter who decides to start the journey.