Educational Debt Forgiveness in the United States
Eastern Michigan University
March 13, 2020
Without Solving Personal Debt Crises the Prospects for Social Justice are Naught:
On Reducing the Pitfalls of Economic Polarization, Neoliberalism and Political Chaos
In the contemporary age of financialization more and more citizens of the world are living in debt bondage and finding themselves subject to those financial parasites that are endangering the global political economy. At this turning point in advanced capitalism, if the One Percent does not provide Clean Slates for the debtors of the world, which has occurred many times throughout human history, then the current economic polarization will only intensify and we will all find ourselves sliding into a new age of darkness. In order to avoid this neo-feudalism and neo-serfdom where people are not tied to the land like serfs were, but instead are free to live wherever though they are unable to make ends meet anywhere. So as we continue to struggle for economic and social justice as well as for societies grounded in sustainable forms of mixed capital, what needs to be done to settle these toxic financial accounts? Using higher education and the student-loan debt crisis in the U.S. as a focus, this article makes the case for student relief rather than for student distress. This investigation is not about a state-financial crime although it could have been. More fundamentally, this inquiry is about equity, harm, and social justice.
Keywords: Debt Crises, Educational Debt, Jubilees, Neoliberalism, and Social Justice
The level of outstanding federal and private student-loan debt in the United States has increased six-fold since 2003. By June 30, 2019 this debt stood at more than $1.6 trillion, more than doubling the $720 billion debt total only one decade earlier. Except for home mortgage borrowing, student loans topped all other sources of debt held by residents of the US, including car loans and credit cards. For financial perspective, this huge figure now exceeds the market value of Boeing, Coca-Cola, Walt Disney, McDonalds, Starbucks, and General Electric combined (Elias, 2020). By early 2020, some 45 million borrowers shared this colossal sum of an ever-expanding amount of student debt (Troop et. al., 2020). As Susan Carlson (2020) recently demonstrated, the unprecedented level of higher education debt and the intergenerational social harm that it generates, as well as the shift away from higher education as a government-financed public good to higher education as a commodity financed by individual debt, are all linked to the state-routinized policies of neoliberalism, disinvestment, and privatization.
Back in 2019, The Daily Show host Trevor Noah described college debt as the new herpes: “Almost everybody has it. It stays with you your whole life. And eventually, you’re gonna have to tell your fiancé about it.” Seriously though, for the “noncompleters, those who dropped out of college, or even people who graduated but then suffered unexpected medical or financial calamity, even a small amount of debt can be paralyzing.” On the other hand, for those “borrowers who can afford the monthly payments, educational debt is just another part of the price of admission to the [shrinking] middle class—even if they never entirely pay it off” (Troop et. al., 2020). With respect to the growing economic polarization or financial inequality found at the end of the second decade of the 21st century, the more affluent the family and the bigger the student-loan balances, the more likely were these loans to pay off as an investment for these graduates because they had access to the high incomes. Conversely, those people whose families reported annual incomes of $30,000 or less, they held nearly half of the college debt. These borrowers also had the smallest loan balances and yet they were more likely to default on their loan repayments.
The loan default rates have not only correlated with socioeconomic status, but also with racial groupings. For example, compared to other racial and ethnic groups, blacks including those who have graduated from college were more likely to default on their loans. According to the Center for American Progress, “about one in three black borrowers who began college during the 2011-12 academic year defaulted on their student loans within six years, a rate two and half times that of their white peers” (Troop et al, 2020).
Educational debt is part of a larger matrix of debts—consumer, corporate and national—that runs throughout the global economy. Together, these accumulations of ever expanding debt are also capturing and driving the international political economies. Most importantly, the primary interest rates since the Wall Street meltdown of 2008 have remained low, creating a debt-financed boom of cheap credit, which has prolonged an overgrowth of debt as compared to subpar growths of both the Gross Domestic Product (GDP) and worldwide trade. Accordingly, we may or may not be on our way to the next global economic meltdown because our debt driven economies and the creation of endogenous monies from banks lending credit primarily to buyers of real estate, education, and other assets, have established lending policies that appeal to future prosperity, which have historically spawned repeated bubbles that burst sooner or later. As Steve Keen (2017) contends in Can We Avoid Another Financial Crisis, the reality has been that the virtues and vices of financialization have turned the United States, Great Britain, and Southern Europe into zombie-capitalist economies of unleashed monetary speculation.
Moreover, as the debt to GDP ratios rise or as the net effects of private debt grows faster than the GDP, then the problem of “debt inflation” worsens, the inability of borrowers to pay back their unpaid debt to creditors increases, and the dollars for spending on consumer goods and services contract as only about one third of workers nominal wages will be available for these purposes. Given the more negative global picture and economic climate described below, the burning and yet often unasked question is: How much longer can credit be extended to consumers, to corporations, to states, and to nations that all share in common the inability to pay off their debts?
In the meanwhile, a concomitant problem is that the various publics have been brainwashed into believing that the banks rather than the ordinary masses are the ones that need saving. In short, it is not about bailing out indebted banks and businesses. On the contrary, it is about bailing out individual borrowers and indebted economies because as Saint Simon articulated some two centuries ago in France, the logic and policy of borrowers paying back their loans should always be dependent on their capacities to do so. Since these capacities are no longer viable for millions of borrowers worldwide, Keen has proposed a Modern Debt Jubilee, essentially swapping equity for debt. In other words, Keen’s solution to the growing debt crisis is for banks to take an equity position in their clients, so that payments to lenders could rise and fall in keeping with money gained or lost. As a transition from today’s debt stagnation, Keen suggests that central banks create a lump sum of money to be placed into everyone’s bank account. Those with debt would be required to use their financial gift to pay down their debt; non-debtors would be allowed to keep their transfer payments so as not to reward debtors for their allegedly individualistic defaults rather than for their structurally caused financial downturns. Similarly, Michael Hudson (2017, p. 270) explicitly argues that what is at issue here “is whether debt-strapped economies will let themselves be driven into a new Dark Age of debt serfdom” or will they “be able to survive by freeing their economies from debt by enacting Clean Slates and restoring progressive tax policy”?
My contention is that without a Clean Slate or some type of Jubilee for a growing number of permanent debtors living a postmodern form of debt bondage, or for a freeing of an ever increasing number of citizens worldwide who find themselves subject to the underside of the current flows of financial speculation and capital expansionism, then the existing and increasing economic inequality and social polarization will only continue to intensify. In short, if the trends in unsustainable economic expansionism and social inequality are not reversed in relation to sustainable flows between different forms of capital and currency, then the societies of the world may very well find themselves slipping, if not propelled, into the next age of apocalyptic darkness. At the same time, because of the spirits of neoliberalism and the blind spots of laissez-faire economic theory, the prospects for such social policy reversals are not very promising. Contra wise, in a debt driven economy the circular flow between producers and consumers continues to atrophy as money is siphoned off by both debt services and by government taxes. Over all, these reciprocal relations of expanding debt have a contracting effect on domestic and international consumption alike.
While this article focuses on educational student debt and social development, I could have framed this inquiry as an examination of a state-financial crime in relation to the dynamics of neoliberalism, disinvestment, and privatization or in relation to social inequality and criminal justice processing of debts, fines, and fees, bailing or policing for profit, or the inability of these punished offenders-debtors to pay for their post-correctional services (Harvard Law Review, 2015; Council of Economic Advisors, 2015). Of course, without other structural reforms, Clean Slates or Jubilees for these and other types of related consumer debts would have the effect of pushing back against debt bondage and/or providing temporary relief from the disproportionate negative impact that these financial practices have on the poor not to mention their tendency to intensify inequality across society (Harris, et. al., 2010). In the sections that follow, I first underscore the particulars of U.S. and global debt in relation to international trade and the worldwide economy. Second, I provide a brief overview of poverty, student-loan indebtedness, and higher education, as well as a detailed picture of the demographics of student borrowing, delinquency, and default since the 2008 Great Recession. Third, I present a short history of worldwide debt forgiveness dating back to the Bronze Age. Finally, I complete this article with a discussion of what is to be done about higher education student debt within the larger structural context of poverty and inequality.
U.S. DEBT AND THE WORLD ECONOMY IN THE AGE OF FINANCE CAPITAL
In the decade following the financial meltdown the global debt rose 50 percent. As of June 2018, corporate, government, and household indebtedness totaled $178 trillion according to figures provided by S&P Global Ratings. This “expansion was especially acute at the government level, which stood at $62.4 trillion, or 77 percent higher than it did before the public borrowing binge began” (Cox, 2019). At 10:13 PM (EST) on March 5, 2020 the outstanding public debt of the United States was $23,461,200,000,000 according to the U.S. National Debt Clock. This meant that every man, woman, and child in the U.S. owed $71,217 on that day for their share of the public debt. This says nothing about individual family or household and corporate debts as well as the interest accruing from these loans. For example, the non-corporate debt of 2017 would have added around $15 trillion broken down as household (including mortgage) at &12.73 trillion, credit cards at more than $1 trillion, and student loans at $1.3 trillion.
Contemporary deficits in the United States are caused primarily by such predictable structural factors as an aging baby boom generation, rising costs of healthcare, and a tax system that brings in less dollars than the government spends. With respect to our nation’s future fiscal and economic stability, healthcare is the most critical issue as it currently represents one-fifth of the entire U.S. economy. As most people are aware, U.S. healthcare is the most expensive in the world, more than double the costs of other developed nations and with poorer overall health outcomes. Our healthcare system is also the second fastest growing part of the federal budget, exceeded only by the interest payments on the debt made to service the previous borrowing. Nevertheless, with the exception of Bernie Sanders, none of the other 25 democratic candidates competing for the 2020 presidential nomination of their party, or any politician from the Republican Party was ready at the time to join the rest of the advanced nations of the world, by “simply” creating a Medicare for All, single-payer, national health insurance program to provide everyone in the United States with comprehensive health care coverage, free at the point of service.
When contextualizing the state of global capital, most economists agree that the complexities of forces shaping macroeconomic institutions are a product of the fact that the rates of output growth have been declining worldwide. In part, this contraction has been a legacy of both the Eurozone and the supranational economic crises still prevalent in most countries to this day. In part, these debtor economies have been systematically on the rise for the past two decades. Incorporating to varying degrees, the high levels of debt—public, corporate, and household—that continue to weigh in on spending and growth, on failed and nonperforming loans, and on limiting the credit supply for new borrowers is a good idea. Similarly, the declining consumption worldwide of goods and services that indeed threatens the exponential expansion of capital accumulation and reproduction in advanced economies, were also both occurring before the global economic crisis made them worse by depressing investment lending and by weakening the expansion of productivity (Barak, 2017).
In emerging markets, these effects have been even more pronounced, especially where aging populations, lower capital accumulation, and slower productivity growth are combining to foreshadow a weaker overall potential for future sustainable expansion. In a few words, growth or the lack of growth is uneven at best and catastrophic at worst. In market capitalism, during ordinary times winners and losers are created in relation to larger monetary movements, such as what the relative prices and exchange rates between the dollar, euro, and the yen are, or when the international prime borrowing and other benchmark interest rates are established, and whether the price of oil or corn is increasing or decreasing. During extraordinary times, winners and losers have often been established in relation to debt crises and to the central banks’ responses to these crises. For example, this was the case when key financial institutions worldwide in response to the ripple effects of the Wall Street implosion spent more than $10 trillion to stimulate their economies.
This type of economic stimulation created a tidal wave of cheap money, which became the ticket for propping up and sustaining growth in many countries, while reducing unemployment and staving off, if not preventing, fiscal panics. Nevertheless, following the Great Recession, 2009 to 2014, ½ of the European nations experienced zero growth in their GDPs. Turning to the Global South, as far back as 2015 and at least through 2017, Brazil with the largest economy in the hemisphere was experiencing negative GDPs. And after a decade of depression, Argentina with the second largest economy in that region of the world, which had temporarily improved its GDPs, according to countryeconomy.com posted GDPs from 2016-2019 as follows: -2.1%, 2.7%, -2.5%, and -1.1%. Perhaps more disappointing than the lack of growth in global GDPs has been the underperformance in the growth of global trade. For example, the IMF had estimated that world trade volumes would grow at an annual average rate of 5.1% for the years 2011 through 2016. However, the actual growth rates for those years were about 60 percent of that estimate or 3.2% per year. And, after the above-average trade growth of 4.6% in 2017, the rates in 2018 and 2019 slowed respectively to 2.9% and 2.6%.
Exacerbating the slowdown in global economic growth and outright stagnation in some geographical locales is the increasing competition of monopoly capitalism, coupled with the geopolitical and neoliberal economic policies of austerity and privatization that have been fueling the “race to the bottom” worldwide between national economies. Furthermore, the developed nations from around the world are now heading towards irregular economies. For example, the forecast for the United States is that 50 percent of the labor force will be dependent on uncertain or contingent work by 2025. Increasingly, these workers will have no predictable earnings, hours, or benefits. This rapidly growing group of workers now include software programmers, independent journalists, Lyft drivers, child care workers, stenographers, beauticians, Airbnb’rs, adjunct faculty and so on. Of course, irregular economics and contingent workers will only depress consumer demand and slow down economic growth and trade further, as earners and borrowers find themselves increasingly on their own for survival; bearing most, if not all, of the risks associated with a changing global political economy.
THE EDUCATIONAL DEBT CRISIS IN THE U.S. AND THE NEED FOR STUDENT RELIEF RATHER THAN STUDENT DISTRESS
In 2013, for a student-loan debt of $26,000 at an average interest rate of six percent compounded yearly using the standard ten year payback plan for federal loans, the total cost payments for that debt came to about $44,000 or some $500 per month for 120 months. Naturally, educational debt costs former students time in savings as well as in interest accruement. Indebtedness also pushes back when and whether former students can purchase that first home, start a family, open a small business or have access to capital. Moreover, when parents have co-signed to secure these loans and their children may have defaulted for whatever reasons, Mom’s or Dad’s social security retirement checks may be garnished as repayment for their children’s outstanding debt. As Andrew Ross argued in Creditocracy and the Case for Debt Refusal (2014), for these casualties of mass default it amounts to a form of punishment for low-income families.
In the decade following the Great Recession the doubling of student-loan debt can be attributed “to a sharp decline in state support for public colleges and a corresponding rise in tuition. State spending per student dropped by 24 percent from 2008 to 2012” and “the share of per student funding that came from tuition rose to 47 percent in 2012 from 36 percent in 2008” (Troop, et. al. 2020). Student loan default rates also increased in the wake of the recession with borrowers from low-income families experiencing the steepest decline in repayments. In response, five income driven Federal Student Loan Repayment Plans were established capping monthly payments as low as at 10 percent of a borrower’s discretionary income. In recent years, these plans have grown in popularity despite their bureaucratic complexities as an alternative to fixed payment plans, constituting by the end of 2017, nearly half the volume of direct student loans. Regardless, for “those with low incomes, the monthly payments often don’t cover the accruing interest, so the borrowers see debt balances rise” (Troop, et.al. 2020).
For the past couple of decades colleges have become less affordable just as they have become increasingly more important for maintaining or improving one’s economic prospects. The federal financial website reported in 2016 that the expected family contributions were much less than the bills students actually faced (Goldrick-Rab, 2016). This means that those without family wealth to support their education—low-income students, minorities, and first generation immigrants—must work more hours and/or take out more loans. Accordingly, their GPAs, completion of degrees, and the future effects of their indebtedness on their life’s choices may be negatively impacted.
In the scheme of things, two-year community colleges are relatively an affordable way for a diversity of people to get, or start, a college degree. However, a survey of 33,000 community college students across 24 states found that about half of community college students were housing insecure, meaning that they had an inability to pay rent or needed to move frequently as in “couch surfing” (Goldrick-Rab, et. al., 2017, p. 11). Fourteen percent were homeless, with four percent saying they had slept in an abandoned building or car. In addition, the survey found about one-third of community college students had food insecurity, with 36 percent answering yes to the question: “Were you ever hungry but didn’t eat because there wasn’t enough money for food?” (Ibid. 2017, p. 12).
Students who are hungry are less likely to be engaging fully with class material. Many are working long hours at low wage jobs, which makes them too tired to study and attend classes on a regular basis. Work and class schedules often conflict. These and other factors make successful completion of the degree, or transfer to a four-year college less likely. For example, a study of 3,000 undergraduates found that even when students successfully complete a four-year degree, they often had to go to great lengths to find money, which meant “a lower likelihood of participating in extracurricular activities, visiting professors during office hours, and spending time on campus” (Goldrick-Rab, 2016, p. 33). In turn, with fewer opportunities to build relationships and social networks, their loan-investments are less likely to bring as strong of returns on their college degrees.
In contrast, families with some wealth can make contributions that can confer a number of advantages. Family wealth expands the options for students, to include wider geographical areas with more economic opportunities. In turn, opening up possibilities of attending more expensive, elite educational institutions. Having good and secure housing does not make college easy, but it does remove several formidable barriers. The same can be said of reduced pressure to work long hours at low wage jobs, or not having to confront the decision about whether to drop out because of mounting debt. Finally, wealthier families have debt amounting to around 10 percent of their income as compared to low-income families whose mounting debt comes to about 70 percent of their income. These lower levels of debt put fewer constraints on life after a bachelor’s degree, meaning more opportunities to pursue graduate school or additional training, or to move away from parents and in with a partner, or to start saving for a house and building one’s own wealth.
A Profile of Student-Loan Debt in the United States
At the end of 2017, the demographics of indebtedness for almost 45 million people was extracted primarily from Jacquelyn Elias (2020) in an article published by The Chronicle of Higher Education as follows:
- Parents as contrasted with students hold only about 6% of the total outstanding debt with their children holding the other 94% of the debt.
- The largest portion of outstanding federal student loan debt was incurred at public institutions, followed by private nonprofit, for profit, and other.
- While less of the debt was incurred at private nonprofit institutions versus public ones, borrowers from these institutions hold more debt on average (Public= $25,676; Private nonprofit=$36,897; For profit=$20,869).
- Distribution of debt and borrowers by debt size: While the majority of borrowers hold less than $20,000 in debt, most of the federal direct loan debt comes from loans greater than $60,000; just 16% of federal student-loan borrowers hold 55% of the debt.
- Nearly half of the outstanding federal debt is held by borrowers who reported their family incomes to be $30,000 or less annually.
- Pell Grant recipients hold sixty percent or $870,400,000,000 of the outstanding federal debt.
- 7 million borrowers who did not complete their degrees hold thirty-one percent of the outstanding federal debt or $457,000,000,000.
- Share of debt by borrower’s income percentile: While outstanding debt is distributed across all income percentiles, the largest portion is held by those with a household income above the national average median, or between $50,000 and $100,000.
- Sixty percent of the student debt or $913,550,000,000 comes from households that have at least a bachelor’s degree.
- The breakdown of student loan share by type of education: 64% for a bachelor’s degree; 10% for professional degrees, 21% for masters or doctorates, 15% for certificates, and 23% for associates.
- Share of borrowers by gender: Between 2009 and 1019, 61% of borrowers were female even though women represented only 57% of students; 39% were male that represented 43% of students.
- Share of borrowers by race: white people account for more than 58% of student-loan borrowers; blacks=19%while representing 12% of population; Hispanic- 17% while representing 16% of population; mixed races=2%; other=6%.
- A Federal Reverse Board survey of household economics and decision making, found that 1 in 3 respondents said they were “finding it difficult to get by” or “just getting by.”
- Share of delinquent debt in comparison with other debt: Mortgage=1%; Home Equity Line of credit=2%, Credit card=5%; Student loans=9%; other=5%.
- Among all types of household debt, repayments on student loans are most likely to be at least 90 days late; at the end of 2017, the balance on 58% of the outstanding debt or $807,300,000,000 stayed the same or increased from the previous quarter.
- At the end of 2017, around 9% of the total outstanding debt was in default, representing 1 out of every 10 borrowers.
- Defaulted federal direct loans by family income: nearly 70% of defaulted direct loans came from borrowers who reported family incomes of less than $30,000.
- Defaulted borrowers by debt size: With respect to those people whose federal direct loans were greater than 270 days delinquent, which is when a loan is considered to be in default, about 1 in five owed less than $5,000 while almost two-thirds of these borrowers owed less than $20,000.
- Share of Defaulting by race: over half of black respondents who took out loans reported defaulting within 12 years of starting college, compared with 23% of white borrowers; American Indian or Alaska=43%, mixed race-41%; Hispanic-39%; Other=28%; Native Hawaiian or Pacific Islander=13%; Asian= 12%.
DEBT FORGIVENESS: A BRIEF HISTORICAL PERSPECTIVE
One party’s debt is another party’s saving or credit. A bank deposit is a debt to the depositor. Money is a government or bank debt. In the contemporary era, most of the real debt from the 99% is the interest owed on their indebtedness to the One Percent. Debt forgiveness or relief also referred to as Clean Slates or Jubilees, and in the Bible as the Day of Atonement when liberty is proclaimed. These are the times when all of the property and persons that had been taken by others for unpaid debts were to be returned to their original families. Everyone previously indebted was to be released from that debt and able to start over again with a clean slate. The royal practices of Jubilee date as far back as the Bronze Age. Beginning in the third millennium BC, Sumerians, Babylonians, and finally Egyptians in 197 BC annulled debts so as to save their societies “from being torn apart by transferring land and personal liberty to creditors” (Hudson, 2017, p. 59). Jubilee Year, or the forgiving of noncommercial debt once every 50 years was also at the core of Judaic Law.
For more than half of recorded history, from 3000 BC to 1000 AD, “religions sanctified the cancellation of personal debt so as to prevent debt bondage and widespread forfeitures of self support land to foreclosing creditors” (Hudson, 2017, p. 206). Thus, it was normal for new rulers to proclaim Clean Slates to annul personal debts owed to the palace, its collectors and other creditors. Humanitarian treatment of debtors was also the norm from ancient Mesopotamia through Solon’s reforms in Greece (594 BC), Judaism’s Mosaic law, Jesus’ announcement that he had come to Jubilee Year (Luke 4), and Islamic sharia law banning the charging of interest. The goals of these royal proclamations, starting with Hammurabi’s Babylonian dynasty in the second millennium BC to the Biblical Jubilee Year (Leviticus 25), was threefold: “to wipe out personal debts…liberate bondservants to return to their families, and [to] restore land and crop rights that had been forfeited to creditors” (Leviticus 69).
With some exceptions, modern debt cancellations or Clean Slates such as the 1948 Allied Monetary Reform in Germany, are limited to personal or corporate bankruptcies on a case-by-case basis. In contrast “to ancient society’s idea of circular time—with clean slates to restore economic balance when debts grew too burdensome—today’s concept of linear time treats the debt build up as cumulative and irreversible. The result is that without debt cancellations economies evolve into oligarchies that claim their takeover is ‘natural’ and thereby morally justified” (Hudson, 2017, p. 59). In the process, those not belonging to the One Percent, increasingly have to work longer to carry the debts they need in order to own their homes, obtain educations, and meet other basic needs. The product is a “counterpart to medieval serfdom” as Hudson (2017, p.89) proclaims, “a looming epoch of debt peonage for entire economies,” not unlike in ancient Rome and Greece where hereditary lordships headed by the financialized One Percent held the ninety-nine percent in deepening debt.
WHAT IS TO BE DONE?
According to a survey conducted in the fall of 2019 by the Pew Charitable Trusts, Americans are divided on this issue. On the one hand, eight in ten respondents thought that the government should make it easier for student borrowers to repay their student loans. On the other hand, nearly the same percentage of respondents thought that student borrowers should make repaying their loans a greater priority. These two responses are not mutually exclusive, as 83 percent of those responding to the survey believed that both the borrowers and U.S. government should take more action to ease the process of loan repayment (Troop, et. al., 2020).
Politicians are also divided on the matter of educational debt. In February of 2020, as part of a fiscal year 2021 budget proposal Republican President Trump unveiled his educational plan that would “end federally subsidized student loans, eliminate the beleaguered Public Service Loan Forgiveness program, place yearly and lifetime limits on Graduate PLUS and Parent PLUS loans, and fold the federal government’s array of income driven repayment plans into a single one” (Troop, et. al., 2020). The Trump Administration proposed plan would also raise the percentage of discretionary income that borrowers on income driven plans must pay from the 10 percent that most current plans require to 12.5 percent. At the same time, the plan shortens the payment terms for undergraduates to 15 years while stretching the length of graduate student loans to 30 years.
On the other side of the isle, the candidates for the Democratic presidential nomination had proposed a range of alternatives for dealing with America’s college debt and rising costs. As for the two candidates left standing at the time of this writing, Joe Biden and Bernie Sanders, they were quite different in their approaches to alleviating the access to higher education problem and the indebtedness-repayment problem of student loans. Biden proposed some modest adjustments to the existing system. He called for federal-state partnerships to provide more financial resources for community colleges and to make these two-year institutions essentially tuition free. His plan also invests $18 billion in grants to Historically Black Colleges and Universities, Tribal Colleges and Universities, and Hispanic-serving institutions. As for the $1.6 trillion student-loan debt and the problem of the growing indebtedness crisis in American higher education, the former vice-president was conspicuously silent on the subject.
By contrast, Bernie Sanders’ proposed College For All Act would provide at least $48 billion annually to eliminate tuition and fees for all students as well as providing all indebted student loans with Clean Slates. As Bernie’s official website elucidates:
Seventy-three percent of the benefits of cancelling all student
debt will go to the bottom 80 percent of Americans, who are
making less than $127,000 a year. President Trump’s tax cuts
for the wealthy and big corporations cost more than $2 trillion,
83 percent of which will end up going to the top 1 percent.
Bernie believes that money would be better spent on freeing
millions of hardworking people from the burden of student debt,
boosting the economy by $1 trillion over the next ten years, and
creating up to 1.5 million new jobs every year. By canceling
student debt, we will save the average student loan borrower
around $3,000 a year in student loan payments. That money will
be freed up to spend on everything from housing to starting a business.
The four main components of Sanders’ College for All includes:
- Guarantee tuition and debt-free public colleges, universities, HBCUs, Minority Serving Institutions and trade schools to all students regardless of income.
- Cancel all student loan debt for the some 45 million Americans who owe about $1.6 trillion and place a cap on student loan interest rates going forward at 1.88 percent.
- Invest $1.3 billion every year in private, non-profit historically black colleges and universities and minority-serving institutions.
- End equity gaps in higher education attainment. And ensure students are able to cover non-tuition costs of attending school by: expanding Pell Grants to cover non-tuition and fee costs, tripling funding for the Work-Study Program.
As I have already revealed earlier in this article, U.S. educational debt is part of a larger matrix of indebtedness and policies of neoliberalism, disinvestment, and privatization that helps to drive the global political economies of capital financialization. Accordingly, since the 1980s both the global and U.S. accumulation and distribution of wealth (and income) has become increasingly more unequal as the poor have become poorer and the medium income of the majority of workers has remained flat. Most national governments have continued to drain resources from the poor and others by way of welfare reform, privatization, and other austerity measures to compensate for lack luster growth.
At the same time, many of these countries especially the United States have repeatedly given away hundreds of billions, if not trillions, of dollars to the rich and well-endowed corporations through esoteric tax sheltering techniques, lavish tax cuts, and a plethora of financial looting schemes sanctioned by the Federal Reserve, the Security and Exchange Commission, and the Department of Justice (Barak, 2012). Consequently, for the past three decades the majority of the American people have been struggling just to stay even economically while the working poor are simply falling further behind.
In conclusion, Bernie’s Clean Slate or Jubilee, his cancellation of educational debt, and his free tuition for all, represent at least sound temporarily means for reducing, if not eliminating, some of the modern variations of serfdom and peonage for the masses. However, in terms of what the United States requires, Our Revolution, does not go far enough! Without other structural changes in the prevailing arrangements of economic, political, and social inequality, such as reinstituting a progressive tax system reminiscent of the postwar 1950s, overturning the Supreme Court’s ruling in Citizens United versus the Federal Election Commission, or passing an Equal Rights Amendment for Women, then clean educational slates and Jubilees for students will not be enough to reproduce social justice for all.
Barak, G. 2012. Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding. Lanham, MD: Rowman & Littlefield.
Barak, G. 2017. Unchecked Corporate Power: Why the Crimes of Multinational
Corporations are Routinized Away and What We Can Do About It. New York:
Carlson, S. 2020. Privatized public higher education: Deregulation, disinvestment, and social harm. Journal of White Collar and Corporate Crime. Vol. 1, Issue 2: pp?
Council of Economic Advisers. 2015. Fines, Fees, and Bail: Payments in the Criminal
Justice System that Disproportionately Impact the Poor. December. pp.: 1-12.
Cowley, S. and Silver-Greenberg, J. 2017. “As Paperwork Goes Missing, Private
Student Loan Debts May be Wiped Away. DealB%k, The New York Times. July 17.
html?emc=edit_ta_20170717&nl=top-stories & nlid=34985918&ref=cta
Cox, J. 2019. Global debt is up 50% over the past decade, but S&P still says the next crisis won’t be as bad. CNBC. March 12. https://www.cnbc.com/2019/03/12/global-debt-up-50-percent-since-the-financial-crisis-sp-says.html.
Goldrick-Rab, S. 2016. Paying the Price: College Costs, Financial Aid, and the Betrayal
of the American Dream. Chicago. University of Chicago Press.
Elias, J. 2020. Who Holds America’s $1.5-Trillion Student-Loan Debt? The Chronicle of Higher Education. March 3.
Goldrick-Rab, S, Richardson, J., and Hernandez, A. 2017. Hungry and Homeless in
College: Results from a National Study of Basic Needs Insecurity in Higher Education.
Wisconsin Hope Lab. Retrieved from http://wihopelab.com/publications/hungryand-
Harris, A., Evans, H., and Beckett, K. 2010. Drawing blood from stones: Legal debt
and social inequality in the contemporary United States.” American Journal of
Sociology. Volume 115 Number 6 (May): 1753-99.
Harvard Law Review. 2015. CRIMINAL PROCEDURE. Policing and Profit:
Developments in the Law. April 10. 128 Harv. L. Rev. 1723.
Hudson, M. 2017. J is for Junk Economics: A Guide to Reality in An Age of Deception.
New York: ISLET-Verlag.
Keen, S. 2017. Can We Avoid Another Financial Crisis? Cambridge, UK: Polity Press.
Ross, A. 2014. Creditocracy and the Case for Debt Refusal. New York: OR Books.
Troop, D., Leckrone, B., and McLean, D. 2020. Unraveling the Complexity of America’s Student-Loan Debt. The Chronicle of Higher Education. March 3.