Editors’ note: Jeffrey Williams will participate in a panel discussion on student debt, co-hosted by Dissent and Jacobin, at Left Forum on the weekend of March 16-18. More info to come.
College student loan debt is a defining political issue of the rising generation. There is good news and there is bad news: it?s good that it?s finally become a mainstream issue, one that politicians feel the need to address (as President Obama did in last week?s State of the Union) and that major media sometimes report on. It?s bad, of course, because a rising majority lives under its cloud, while at the same time facing shrinking job prospects and other economic conditions that belie anything like an American dream of prosperity for all. Instead, there is a new, high-stakes dream: that one might hit it big and become a member of the investor class, while the rest are left behind.
In ?Student Debt and the Spirit of Indenture? (2008), I showed how this new form of indebtedness is like indentured servitude. The analogy resonates far more than one would expect. Student debt is usually considered a transport to a job; it?s secured by the person, not property; it has grown to substantial amounts and terms; it breeds an extensive banking system; and it?s enforced by law and governmental mandate. In the prequel to that article, ?Debt Education? (2006), I wrote about the way that student debt rewrites the social contract for education, transforming it from a public service and common right to a privatized service and individual purchase. It is a pedagogy different than the one advertised?higher education teaches two-thirds of the student body, in blunt material terms, not humanistic ideals nor freedom of thought but that students are consumers who justly face a decade of financial constraint after college.
In the midst of all the new attention focused on the issue, I want to remind Dissenters that student debt is not the result of the so-called financial crisis; it has germinated since around 1980, and finally began to fester in the 2000s. It rose from relatively minor amounts?from an average of about $2,000 in 1982?to about $9,000 in 1992, $22,000 in 2002, and approaching $27,000 now.
Why? It was not because of inflation, which increased by a factor of less than two-and-a-half in the same period ($2,000 in 1982 is $4,483 in current dollars), nor because of inevitable movements of the market. It is because debt is a policy. It was a product of the deregulation of banking, particularly of non-secured loans, as well as the defunding of public services that started in, as Sean Wilentz has recently named it, the Age of Reagan. It is also a class policy, since two-thirds of students have it, but one-third has none. In other words, it is an issue of social justice. While it is daunting, it is a policy we can change.
There are several groups that have put forth new initiatives to reform college student loan debt. Probably the most visible one at the moment is Occupy Wall Street?s ?Occupy Student Debt Campaign,? which is circulating a ?pledge of refusal? that promises to conduct a kind of debt strike if one million people sign the petition. The campaign also has petitions for faculty and other supporters to sign. While the spirit of OWS has drawn attention to the issue, the pledge has not gone very far, with only a few thousand signatures.
Another initiative implemented through Facebook, ?Cancel Student Loan Debt to Stimulate the Economy,? founded by lawyer Robert Applebaum, has gotten over 600,000 signatures. It clearly has touched a chord, although it remains to be seen if change can occur through the click of a mouse.
While I?ve signed both petitions, they pose a few problems. First, is forgiveness practical and, moreover, just? Applebaum clearly modeled his call on the mortgage crisis, but the solution there, for debtors, is to renegotiate the loans at fairer and more practicable rates, not to forgive all debt and get a house for free. (Though a consumer good of a sort, housing is after all a necessity.) That solution presumably benefits banks, who would get some payment rather than a foreclosed house, as well as homeowners. To that end, why should student debtors pay 6.8 percent when banks can borrow at below the prime rate (now at 3.25 percent, and further discounted for banks)?
Second, not all student loans are alike, so how do we account for the differences? The debt from private colleges is typically much higher than that from publics. Should public funds be used to subsidize high private fees, or should they be tied to tuition at public universities?
A more measured proposal than Occupy?s and Applebaum?s has been advocated by Alan Collinge, who founded Student Loan Justice and is the author of The Student Loan Scam: The Most Oppressive Debt in U.S. History?and How We Can Fight Back (Beacon, 2009). Collinge argues for the return of personal bankruptcy protections on student debt, as there are on any other personal loans. (At the current moment, student debt, federal or private, is virtually unforgivable, covered by different laws than those that apply to, say, credit cards).
A new group that holds promise is EDU Debtors Union, founded by CUNY student Monica Johnson. It takes the model of student unions to organize around the issue, with a website that acts as a clearinghouse. Another clearinghouse is FinAid, run by Mark Kantrowitz. Though he takes a middle line between the industry and loan activists, he provides a good bit of information. (See his recent article, ?Will Occupy Wall Street Shake Loose Some Change??) As he notes about the Occupy pledge, such a refusal would not hurt banks; their loans are covered. Rather, it would hurt those who didn?t pay. It?s clear something has got to give.