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Today's Top News
Here's a Demand: Forgive Student Loan Debt
As US student loan debt nears $1tn, it's time for the banks that stole these young people's future to do the right thing
As the Occupy Wall Street protest enters its third straight week in New York and continues spreading all across the country, what is abundantly clear is that "the other 99%" – as opposed to the super-wealthy 1% who've been coddled for decades under the failed economic premise that cutting their taxes and providing them with countless tax shelters, loopholes and other breaks will "trickle down" to the masses – are simply fed up with the status quo. So they are doing the one thing within their power to make their voices heard.
The Dodd-Frank Wall Street Reform Act fell far short of addressing the practices and behavior that lead to the near-collapse of the world economy. Corporations are sitting on record levels of cash, but are refusing to hire. Personal debt, including mortgages, credit cards and especially student loan debt have reached astronomical levels. All this is true, yet Washington, DC and the bankers on Wall Street seem tone deaf to the needs of the people.
For two and a half years, I have been advocating for a new way of stimulating economic growth from the bottom-up – a "trickle-up" approach to rebuilding the economy that reflects the realities of the 21st century via the campaign Forgiving Student Loan Debt. The argument is simple: relieving middle-class people of their educational debts would enable them to begin spending money in ailing sectors of the economy, start businesses and families and buy homes – that is, to have the "American Dream" that seems more and more out of reach with each passing day.
For the first time in history, total student loan debt recently surpassed total credit card debt in the US: current and former students collectively owe approximately $946bn in student loan debt, with no sign of this accumulation slowing down. In fact, it's projected to exceed $1tn within the year. Student loans have been stripped of nearly all basic consumer protections that every other type of debt enjoys, including bankruptcy protections and statutes of limitations. So, while you can have your business, credit card, mortgage and even your gambling debts discharged or restructured in bankruptcy court, student loan debt is with you for life – and sometimes beyond.
By turning education into a commodity where the students must personally bear the full costs of an educational system that, in fact, benefits all of society, not just the students themselves, we've shifted the ever-increasing burden of skyrocketing tuition costs down the socio-economic ladder onto those who can least afford to shoulder them. Couple that with a job market that's been utterly decimated by the irresponsibility and greed of those at the very top, the underlying reasons for the Occupy Wall Street protests start to come into focus.
If the Federal Reserve can hand out over $16tn in loans, at little to no interest, to the very institutions that caused the financial collapse in the first place, why must average Americans borrow money at upwards of 8% or more just to obtain an education?
How can we expect the housing market ever to improve when those we generally rely upon to purchase homes – college grads and professionals – are buried under tens of thousands of dollars or more in student loan debt, from which there is almost no escape?
If education is "the great equaliser" it's always touted to be, then why have over 432,000 people signed a petition in favor of student loan forgiveness as a means of economic stimulus? In the two and a half years that I've been working on this issue, I have yet to come across a single person who doesn't want to pay back what they actually borrowed (as opposed to three, four or five times the sum they borrowed); but they simply don't have the means to do so.
For more than 30 years, the rich have gotten richer, the poor have gotten poorer and the middle class has been nearly squeezed out of existence. Forgiving student loan debt would not only provide for a sustained economic stimulus over the course of the next 20-30 years by allowing educated Americans to use the money productively – rather than have to spend it on repaying several times the amount they borrowed to obtain a degree that no longer has the same value it once did. That would not only grow the economy, but it would also serve as a reaffirmation that an education is actually worth pursuing.