Indebted students are a force to be reckoned with.
There’s a generational time-bomb
ticking — and the student debt crisis is the trip wire.
Adults under 35 disproportionately
bear the brunt of escalating inequality.
America’s educated youth are
graduating into an economy with stagnant wages and a torn safety net. Federal
and state budget cuts, meanwhile, have spiked tuition costs and cut public
services that aid young workers, such as transportation and affordable housing.
A rumble of legitimate
discontent is mounting from the 40 million
Americans saddled with student debt totaling $1.16 trillion —
a number expected to increase to $2 trillion by
2022. College debt now touches one in five U.S.
households and exceeds total credit card indebtedness.
The most frustrated students are blocking highways over tuition hikes. Others are launching “debt strikes” by refusing to pay the for-profit schools that bilked them.
Many more are defaulting after
facing the stressful realization that they can’t find a job that pays enough to
repay their debt. Over half of
outstanding student loans are presently in deferral, delinquency, or default.
The student debt debacle has
huge implications for the future. The average college graduate is now almost $30,000
underwater, with some on the hook for over $100,000.
This debt keeps young
people from starting families, buying houses, and taking risks
on new businesses. It also exacerbates the growing problem of wealth inequality
and declining social mobility, since it gives debt-free graduates from
wealthier families an enormous head start over their peers.
Many baby boomers without kids
in college don’t fully appreciate how the economy is tilted against the rising
generation — or how much higher education financing has changed from previous
generations.
Since the 1970s, tuition rates have risen over 1,000 percent, while state funding of universities has declined by 40 percent.
And the proportion of young Americans with education debt more than quadrupled, from 5 percent to 22 percent.
The powerful student loan
industry lobbied for — and got — draconian laws that penalize student debtors
more than people holding mortgages, car loans, or credit cards. Servicers can garnish young
graduates’ wages and disability payments to get their due.
And not even bankruptcy can
cancel out these loans.
In some states,
student debtors who fall into default can lose their professional
certifications and even their driver’s licenses. Imagine borrowing money to get
a nursing or cosmetology degree, falling behind in your payments, and having
your source of livelihood revoked.
It doesn’t have to be this way.
Other countries have offered free public higher education for decades.
In the 30 years after World War
II, the government expanded access to debt-free college for millions of
Americans.
These included GI Bill recipients, but also millions of men and women without military service records who attended the great public universities of our land, paying a tuition bill they could afford with only a summer job.
These included GI Bill recipients, but also millions of men and women without military service records who attended the great public universities of our land, paying a tuition bill they could afford with only a summer job.
Lawmakers should reverse the
cycle of state budget cuts in higher education that shift tuition costs onto
students and their cash-strapped families. Some states are considering creating
“opportunity
trust funds,” capitalized by state estate taxes on the richest 1
percent, to finance debt-free public education.
The national Strike Debt movement calls on
Congress to spend an additional $15 billion a year to make public education
free. They could accomplish this by cutting out for-profit
colleges and the parasitical college loan industry, and by simplifying the
existing labyrinth of education subsidies.
The vast majority of college
debtors still suffer in isolation, viewing their struggle as a personal
problem, not a societal issue. But this is about to change. When college debt
borrowers wake up and flex their political muscles, they’ll be a force to be
reckoned with.
Chuck Collins is a senior scholar at the Institute for
Policy Studies (IPS-dc.org) and the
co-author, with Bill Gates Sr., of Wealth and Our Commonwealth: Why
America Should Tax Accumulated Fortunes. Distributed by OtherWords.org