A Student Jubilee! Liberate 41 Million Americans From Crushing Loan Debt
President Obama's proposal for tuition-free community college education, and the broader discussion which it has inspired, confirms our belief that it is time for a comprehensive solution to a $1.3 trillion problem: student debt in the United States.
We strongly support the concept of tuition-free public higher education, and are encouraged by renewed arguments in its favor. But we must also confront what has been done to the last several generations of students. They have been forced to take on debt that is crippling to them, to our economy and our society.
A student debt "jubilee" would reflect both the values upon which this nation was founded, and the economic principles which have sustained it through its greatest periods of growth and prosperity.
It is time for a truly transformative idea: Let's Abolish All Student Loan Debt in America.
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Jubilees Then and Now
The Liberty Bell represents our nation's core values, combining personal freedom with community action. The words inscribed on the Bell - "Proclaim liberty throughout the land, and to all the inhabitants thereof" - are from the Book of Leviticus and refer to a Biblical "Year of Jubilee," when all debts were periodically forgiven by the nation's rulers.
Those Jubilee years - proclaimed at 49 year intervals for over 4,000 years - were both moral and practical in nature. On one hand, they were an acknowledgement that prolonged and excessive debt was an unconscionable burden. That morality is woven into the ethical foundation of Western civilization, which accepts the notion of fair debt but rejects indebtedness which is usurious or impinges on human freedom.
But they were also an economic necessity, preserving social harmony while ensuring uninterrupted production. The practical value of debt forgiveness has been explored by scholars who note that it reinforces social cohesion and prevents large groups of people from falling into poverty or oppression.
These goals remain as important today as they were in ancient times. A vibrant middle class is the engine of a functioning economy. A sustainable future is impractical without it.
While "Jubilee Years" were created long ago, the concept lives on today in different forms. Most modern Western societies have drawn on similar moral and practical arguments to end usury, indentured servitude, and slavery. Bankruptcy laws extend a kind of individualized "jubilee" to people who are over-burdened with debt. (Ironically, student debt is exempted from most forms of bankruptcy relief.)
Now we face a new moral challenge. We need a new and transformative movement, one which echoes the struggles of recent history while drawing its inspiration from ancient traditions. Our massive student debt burden is a moral and ethical challenge. This debt draws upon the as-yet unearned wealth of each new generation, mortgaging tomorrow's wealth and inhibiting the prosperity of the future.
How did we get here?
The Rise of Student Debt
There was a time in living memory when many Americans could obtain public higher education at little or no tuition cost. Today a college degree has become prohibitively expensive for many, while millions of others are required to borrow extensively in order to meet its soaring costs.
Rather than address the cost of education, the root cause of the problem, the government became the primary lender for student debt, a move which contributed to runaway costs and crippling indebtedness. As a result, student debt is now the second-largest form of personal debt in this country, exceeding credit card debt and trailing only home mortgages.
Student debt is a dark betrayal at the heart of the American promise, and it must come to an end.
The statistics paint a clear picture: Student debt has soared, and continues to rise. The total amount owed is now $1.3 trillion. Approximately 41 million Americans now carry student debt, a figure which rose 40 percent between 2004 and 2012. According to the National Center for Education Statistics, the average amount owed for each graduating borrower has risen from less than $10,000 in 1993 to more than $30,000 in 2014 (in inflation-adjusted dollars). This debt has disproportionately affected lower-income Americans, but has affected households at all but the very highest income levels.
It gets worse. Unscrupulous "educators" and loan servicers in the private sector have exploited unwary students and their families. For the last six years, debt-burdened college students have entered the worst employment environment for young people and graduates in modern history. Politicians who have been too timid to tax hedge fund billionaires the same way they tax their personal assistants are ironically using the money from debt-burdened students and their families to offset the loss.
Social factors make the burden even greater. Upward social mobility is at record lows for the United States, and continues to fall. We pride ourselves on being a nation where "anyone who wants to work hard can get ahead," but the statistics belie that statement. Education seems to be the last avenue of advancement for lower- and middle-class American young people, many of whom are faced with a terrible choice: either accept their economically disadvantaged lot in life, or assume a crushing debt on the hope that tomorrow's earnings will eventually offset today's burden.
This is not a moral system. It is our nation's Faustian bargain with the future, forcing students and their families to mortgage their hopes and dreams because society is no longer willing to provide them with an education. That is a moral abdication and it has led to a form of indentured servitude for young college graduates, many of whom entered the worst job market in decades.
A Moral - and Practical - Solution
Student debt doesn't just represent a breakdown in our social conscience. It also reflects a loss in our longstanding economic judgment. The entire society benefits from well-educated citizens, who provide it with better employees, brighter visionaries and leaders, artistic enrichment, and wiser participants in a collaborative democracy.
It is time to forgive this debt and set our students and their families free. We propose a Student Debt Jubilee which will forgive all $1.3 trillion in American student loan debt. Here's how it can work: Most student loan debt (approximately 86 percent) is held by the Federal government. That means it is actually owned by the very people who owe the debt. That debt will can be forgiven by government action. The remainder is held by private lenders and will be the subject of future proposals.
Many people's first reaction will be: We can't afford it. While we will provide more detail on the funding process soon, the answer is a simple one: Yes, we can.
First, let's reflect on our priorities. The Jubilee would cost less than the 2001 tax cuts, which primarily benefited the wealthiest among us - and is only slightly more than the ten-year cost of offshore tax loopholes for corporate America. For another perspective, a study published 18 months ago showed that the costs of the war in Iraq had already exceeded $2 trillion.
We realize that a "student debt jubilee" will cost money. But it will also stimulate economic growth, by injecting more money into the overall economy, and that growth will provide more tax revenue for the government. There will also be a major expansionary effect, as young Americans liberated from debt are able to buy homes, start businesses and pursue their dreams. And in the future our economy will benefit from a better-educated population.
As we address today's student debt, we must also ensure that tomorrow's college students aren't forced into excessive debt. We must therefore see to it that residents of every state have access to tuition-free public higher education. This is not a radical notion, or even a new one. President Obama's plan for free community college stands on firm footing. The University of California was tuition-free until the 1960s, for example, and free higher education was available in New York City for well over a century. Germany has just joined the growing list of nations which offer their citizens a cost-free college education.
We are pleased that the President's community-college proposal has sparked a new debate about four-year education as well. But tomorrow's free tuition, should we achieve that goal, will not relieve the crushing debt burden of the past.
We are not naive. We know that this idea will meet with bitter resistance from those who argue that it "rewards the undeserving" or encourages irresponsible borrowing. (Paradoxically, many of those who will make those arguments remained silent as Wall Street was rescued and tax breaks were offered to undeserving financial speculators.) There are those who will argue that the idea is fiscally irresponsible, despite the fact that it will have a positive economic impact in the long-term.
We also know that, while the concept is simple, it will require more thought and discussion. That's why we will continue to explore and expand upon this proposal until we have reached our goal. This is a new idea to most people. It represents a fundamental shift in our moral universe, just as other such struggles - for workplace rights, women's rights, and civil rights - have in the past. It is an idea whose time has come. But these shifts don't come easily. They take time, and debate - and an organized movement.
We hope you will join us.
If you agree, click here to take action.
"Public sentiment is everything. With public sentiment, nothing can fail. Without it, nothing can succeed." -- Abraham Lincoln