This week Shanna speaks to a panel of experts to bust common myths perpetuated about student loan cancellation. Laura Beamer, Lead Researcher Higher Education Finance, Jain Family Institute, Jalil Bishop, Assistant Professor of Education at Villanova University, and Attorney Sparky Abraham clarify how cancellation would affect the economy, who benefits from cancellation, and why means testing doesn’t work.

References

 

Transcript:

[00:00:05] Shanna Bennett: Hi, I’m Shannon Bennett and I’m with Laura Beamer, Jalil Bishop and Sparky Abraham, and you’re on Matter of Life and Debt.

[00:00:17] Welcome to the podcast. Hey everyone. Hey, thank you for being here. Thank you so much.

[00:00:24] So we’re going to dive right in. We are having this conversation because if you are pushing for wide-scale student debt cancellation or any kind of higher education financing reform, you’re probably getting yourself into some very interesting conversations lately.

[00:00:41] There are some contradictory articles and facts and data. There’s a lot of misinformation. And so we have gathered together some folks that we trust, to have this conversation. And these are individuals who are dealing in this kind of data. So we figured we’d have this conversation. We gathered some questions from Instagram and from some of our folks at the Debt Collective. We’re just going to move through these items and get their feedback. Before we dive in, let me properly introduce our guests, because I want you to have an idea of where they’re coming from. So first we have Laura Beamer. She is the Lead Researcher of Higher Education Finance at the Jain Family Institute.

[00:01:25] If you’re not familiar with them, they are a non-partisan applied research organization in the social sciences. We have Jalil Bishop. He is an Assistant Professor at Villanova University. He is a social scientist focusing on the role of racism and anti-racism in institutional systems across housing, education, and labor markets.

[00:01:46] And lastly, we have Sparky Abraham, a legal strategist with the Debt Collective and founder of Jubilee Legal, a debtors’ rights law practice in Oxnard, California.

[00:01:58] So welcome again. Let’s dive right into the burning question. Okay. The burning question is in what ways would full cancellation of student debt affect the economy? Both pros and cons, positives and negatives.

[00:02:12] Laura Beamer: I I guess I can start us out. So we know that student debt cancellation will for sure have a stimulatory effect, but it’s going to be over the long run. So just like how the COVID payment pause has made incremental changes to people’s lives with each month that they don’t have to pay their loans.

[00:02:30] That’s the same way student debt cancellation will work. So there’s been multiple studies. One really great one in 2018 that found that real GDP will increase, that it will reduce unemployment, that there’ll be tons of spillover effects in creating small businesses. People will go back to school and get better degrees.

[00:02:50] They’ll participate in the economy in other ways, possibly through buying homes or starting a family or, even just saving for retirement or having more spending money each month so that they don’t have to pay student debt. One of the biggest impacts will be the long run impact, especially considering that student debtors are a disadvantaged group. And just to answer the question before it comes, right now we’re worried about an overheated economy because of inflation and we have lots of studies also that say that student debt cancellation because of its long run stimulatory effect will not have a big impact on inflation. So I just want to put that out there right away.

[00:03:33] Shanna Bennett: That’s usually one of the arguments we hear against student debt cancellation. What about inflation? What about taxes, et cetera, et cetera. And we can kind of shift to that if you’d like, because that’s more of the myth-busting that I think we’re after. So you’re essentially saying that wide-scale student debt cancellation more than likely will not have an adverse effect, let’s say on inflation because of its long-term impact.

[00:04:00] Laura Beamer: Yeah, it’s going to be about a percentage point contributing to inflation. That calculation was done by the committee responsible for the federal budget, and it was done only like a few months ago. So it’s a very reliable resource

[00:04:13] Jalil Bishop: I’ll add that I think a key piece in framing this conversation is first, it makes sense to be worried about inflation, to be worried about student debt cancellation potentially increasing our taxes, having some type of negative consequence on the economy. I want to acknowledge that those are real worries and things that we should talk about. At the same time, I think we have to understand that when we say it’s going to grow the economy, we’re not throwing out some type of small impact. We’re talking about long-term growth that is estimated sometimes up to $108 billion a year over the next 10 years. We’re talking about the impact on inflation being so small that it’s often estimated to be around 0.2, 0.3 percentage points around the impact of student debt on inflation. So I think we have to just make those data points clear because there is so much misleading and sometimes just zero evidence claiming to be put out there to push back against student debt cancellation. We know there is such a wide range of ways that student debt cancellation will impact the economy, the everyday worker, and just our overall economic goals, I think as a country.

[00:05:21] Shanna Bennett: Right. That’s a good point. Those are very, to kind of rephrase what you said, very worthwhile concerns. They make sense. It’s part of the reason why we’re having this conversation as well. We have a soundbite from that April 4th day of action with the Debt Collective. Where we are walking around the Department of Education with Astra Taylor while she is symbolically kicking a can, as we’re walking around the building.

[00:05:49] And we’re talking to her about the possibility of our taxes increasing with wide-scale student and debt cancellation. And she said, no, she said, no. She said, we’ve increased the military budget, have your taxes gone up? It doesn’t necessarily correlate.

[00:06:02] Sparky Abraham: Oh, I was just gonna say it’s also relevant to that point. This isn’t just forward looking speculation on what is going to be necessary to cancel student debt or what the effect on inflation is going to be. Student debt has effectively been canceled for two years, right?

[00:06:17] Like all of the effects that we can expect are already here. If it didn’t require raising taxes to pause payments and interest for two years, it wouldn’t require raising taxes to do cancellation. That’s the same thing.

[00:06:30] Shanna Bennett: That’s a really good point. So I want to take that stance. If I’m debating, I keep waiting for the person to say, well, yeah, but eventually people will start paying. And so that’s why we don’t feel the effects of the pause because eventually people will start paying, but it’s like, no, no one’s hurting for that for those funds.

[00:06:46] And meanwhile, we have student loan servicers that are lobbying the government, spending millions of dollars to lobby the government while payments have been paused.

[00:06:55] Laura Beamer: Yeah, I would argue that student borrowers expect cancellation. Biden ran on cancellation. He made promises about cancellation. And so, okay yeah it’s not become reality yet, but that’s the expectation that it will be so millions of people with the expectation that’s going to be canceled are already acting like it has.

[00:07:18] Shanna Bennett: I haven’t heard that argument before the COVID pause is not the same but people aren’t acting in the market like they would as if there was actual full-scale cancellation. And also the third largest lobbying group in Washington are universities.

[00:07:33] They love the student debt program. It’s lining their pockets. Servicers like you said, definitely too. Servicers are finally starting to get the boot. They’re falling out of the program left and right. I would think it’s only a matter of time before hopefully we come at hard after all the bad actors in the institutional system. Colleges, nonprofit and for profit. I think we’ll get to it, but I did read a portion of your more recent work about deceptive pricing tactics in higher education. And how it’s, one of the components of people taking on more debt than they originally anticipated, which boggled my mind.

[00:08:17] Laura Beamer: Yeah I can talk about all the bad actors all day long, but that’s another argument people have against student debt cancellation is a moral hazard. Oh people are going to borrow more and just think it’s going to get canceled. And I just shake my head, because student borrowers are always the ones left holding the bag.

[00:08:38] Shanna Bennett: They’re always the bad actors. They’re always the ones that are taking advantage of the system. And it’s just like, how does this narrative actually work on people? I agree. And to that, I usually say, well, what about the bankers? And what about the politicians? We are left holding the bag and I think it’s really unfortunate. But to switch gears for a second, and this isn’t a question we discussed, but you know, S10K is that S10K number Worthwhile? Does that even make sense for wide-scale debt cancellation? Thoughts on that?

[00:09:15] Jalil Bishop: If $10K cancellation came down, it would have some benefit. It will do some good for borrowers. But the bigger question here is why would you only do $10K when you know the problem is so much bigger? When you know, the solutions and the mountain that needs to be canceled are so much bigger?

[00:09:34] And the process to cancel $10K or cancel all debt is really the same process. That effect from everything that we’re seeing and the 10 K proposals you’re actually going to make a much harder and more complicated and more costly process, trying to cancel $10,000 with an income cap or canceling $10,000 only for undergrads. Pretty much proposals that sound like there’s somehow being fiscally responsible theoretically, but in practice there’s no bureaucracy or administrative process that can actually carry these proposals out. So full debt cancellation in a lot of ways is not only the more realistic approach here to solve what is a now 30, 40 year old crisis, but it also can just be done.

[00:10:18] It’s something that we can see a clear path of how you get that relief to borrowers or be harmed where the $10K and the income caps and these other limited types of relief are so complicated. And we’re telling the Department of Ed they have no evidence that they can carry out these types of targeted programs.

[00:10:37] We’re asking them to do another complicated program where we have 30 years to say they just simply can’t and don’t have the means to do it effectively. So the $10K yes. If it happened, it would offer some relief. But the bigger question is why would you give people crumbs when you could really give them a real solution?

[00:10:56] Sparky Abraham: Yeah, there’s such a big point there, right? Because yes. Everything that you just said is correct. Right? It would be difficult. It might be impossible to kind of administer this kind of thing in a reasonable way but the question that we skip over when we even start having those arguments it’s like why?

[00:11:12] Right? What is the benefit of limiting cancellation to $10,000? And the fact is that there really is no articulable benefit that you will hear from anybody. If you think that student debt is particularly difficult or in my case, I think it’s unjust debt that people should not have to go into debt for education.

[00:11:30] Then what’s the reason why you would want to leave tens of millions of people in debt? If you have the power to cancel it, if you could do it all at once, if it would be administratively easier, if it would be economically beneficial? It’s like these numbers are just kind of arbitrary. It’s like somebody just threw out $10K as a way to sound smart in some memo somewhere.

[00:11:48] But if you actually just think about it, why would you do that? There’s no reason. But I think the other point to make on that too, is just to have kind of a detailed awareness of how the cancellation amount actually affects people in their lives. Which is to say that if you cancel $10,000 worth of student debt for anybody with less than $10,000 of student debt, that’s great.

[00:12:10] They’re out of debt. Their payments are gone, right? If you have more than $10,000 worth of student debt, that effect on you is going to look different depending on your situation. For example, if you had $20,000 worth of student debt and you were making money and you were able to pay your normal ten year standard repayments, like that’s probably going to decrease the amount that you have to pay each month in a way that there’s probably going to make a difference.

[00:12:34] If you have $90,000 of student debt, even if you’re making your standard repayments, which most people are not. It’s not going to make that much of a difference in your monthly payment and no matter how much student debt you have, if it’s more than $10,000 and you’re on income based repayment, which I think around a third of people with student debt are, that means that your payment is not based on the amount of debt that you owe.

[00:12:59] And so unless you’re really close to $10,000, in which case it’s going to take it way down. It’s actually just not going to change the amount that you have to pay each month. And so what we’re talking about is doing this big, big, complicated administrative thing drawing all this ire from people who were mad about it.

[00:13:15] And then the people who are going to benefit don’t even actually see any benefit on a day-to-day level. it really doesn’t make any sense.

[00:13:23] Shanna Bennett: I think, and that’s why on some levels it feels like theatrics. Pre-midterm theatrics unfortunately. For the black and brown women that traditionally are taking out more in student debt that traditionally owe more than $10,000. It’s not enough and it’s not helpful. I read an article by the Roosevelt Institute suggesting $75K would be more beneficial. Again, if you’re trying to, help these black and brown women who tend to go further and take on more advanced degrees and thus take on more debt. And then just to kind of what both Sparky and Jalil are saying regarding this bureaucratic application process that will probably come from this, so the Education Department is saying that they don’t have access to our 2021 tax data.

[00:14:14] They don’t have access to it. Who does have access to it is the IRS. And they can’t very easily share that information with the Education Department. So it’s not something that they can do automatically and so they’re essentially saying they will require information from the borrower, which is me and you.

[00:14:31] So we will have to apply for this kind of quote, unquote assistance or quote unquote forgiveness. rather than just making it automatic. And what we’re talking about is means testing. So instead of just having it be a wide scale, it’s still targeted. and I think the approach right now is to offer it to folks that are earning less than either $125,000 or $150,000 a year for a single filer or it’s $250K or $300K for joint filers.

[00:15:02] Which is actually a really nice segue into means testing. Does it make sense to means test this kind of cancellation? Why, why not?

[00:15:12] Laura Beamer: I mean, I feel like we all agree here. The answer is no. I mean, just from a practical standpoint, it’s going to be a complete implementation failure. Just like every other means tested program in the Department of Education. We’ve even had employment tested programs at the Department of Education that failed miserably.

[00:15:32] So from an implementation standpoint, absolutely not. We don’t have a bureaucracy in place that can handle, means testing. Millions of people will not get relief if we means test it. Even if the person is deserving, whatever that means. If they make less than a certain amount. There’s the other question like Sparky was saying this arbitrary number of $10,000.

[00:15:59] You can say the same thing about the income cap. It’s very arbitrary just because someone may have high earnings year over year. It doesn’t mean that it’s reliable. Income can be extremely volatile for someone. Just because they have higher earnings doesn’t mean they come from a background that means they can pay off their student debt.

[00:16:22] But yes, back to means testing the answer is no we shouldn’t do it. It may seem like a good policy, but in practice it’s impossible to implement.

[00:16:32] High-income also doesn’t mean that it’s justified either, right? I mean, again, I want to keep going back to just the moral position on this, which is, student debt is a way to charge people more for education if they couldn’t have afforded it in the first place. And the fact that you make more money after the fact, it doesn’t make that any more right. What I think people are trying to get at when they’re talking about these kinds of income limits means testing is this general broader idea that’s like, well, actually rich people in society should carry more of our collective burdens. And I absolutely a hundred percent agree with that. That’s why we have progressive income taxes.

[00:17:10] Sparky Abraham: I don’t think it’s the case that people with higher incomes after having chosen to go to college when they couldn’t afford to pay for it upfront are the group who should bear more collective burdens of society. Right? it’s just, you’re trying to do something through the wrong system here.

[00:17:27] Jalil Bishop: And I think that we should really call out that a lot of this is political theater. That for the last two or three years now, I think we all have had interactions with people in the Department of Ed. People who are now a part of the Biden Administration make it very clear that there is little evidence and little belief by people who actually are a part of trying to build out these programs and systems that this is possible. And that the extent to which it is possible, that it can be carried out in any type of way that will be accurate, that will get the impact that we are aiming to have. And I think calling it political theater allows us to Sparky’s point, to call out those who are being described as rich in these abstract terms. Borrowers described as rich would not fit any definition of rich if we actually had to pull their kind of assets or income portfolios, and look at them. That if a rich person is someone who’s on a payment plan who has zero assets who lives in a working class census track, who is a person of color, who’s making payments that don’t decrease their principal or interest because that’s the face of a borrower that is not the face of who we think of as rich. But a lot of this research allows these talking points to do really misleading things, where they run analysis and will suggest that someone making $68,000 is now rich. And to the everyday person, they just hear rich borrowers are getting an outsized benefit.

[00:18:54] And it makes sense that they run with that. But we have a lot, I think, of elected officials and researchers who have intentionally misled the public around this idea that borrowers are somehow this rich category that now going into debt is an indication that you are on the path to fast retirement and living the high life. It’s silliness that I think has to be called out because we have an administration that’s saying we’re not increasing taxes on anyone over $400,000.

[00:19:20] But if you make anywhere near a hundred thousand with student debt, we’re not giving you any relief, no matter how much evidence shows the burden and consequences of such a theatrical decision.

[00:19:36] Shanna Bennett: Right. I think also if you’re going to look at income level, then also look at their overall debt burden. And look at how much per month their student debt payments are. Because otherwise it doesn’t make any sense. And I think applying this kind of solution just shows how disconnected this administration is from the actual issues.

[00:19:57] Laura Beamer: Yeah, I wanna harp on that too. Just for a second. If someone holds student debt, it is a marker that they have financial need. It’s a calculation that the Department of Education, federal student aid takes into account a borrower and their family’s resources and figures out how much money they need for school.

[00:20:18] If you have student debt, you have financial need. If you don’t have financial need, you don’t have student debt. So we already know, just based on how student debt works, that it’s a regressive tax on borrowers. And when people say that people with student debt are actually rich because they have a degree that is worth something to them 30 years from now.

[00:20:41] It’s just a very gimmicky ploy. It’s very disingenuous. Student debt is a regressive tax on disadvantaged, financially needy people, and we just need to harp on it. Cause it’s just not true that student debtors are rich.

[00:21:00] Sparky Abraham: Yeah. And if I could get to my harping point too, I think the student financing system is a mistake, right? What we’re talking about is education. Education should be publicly funded. It should be funded the same way that K-12, I mean, not necessarily the exact same way, but in the same manner. This is a public good that we all should be providing.

[00:21:14] And it was a mistake to put this burden on individual borrowers. That student debt is actually unjust debt. And when you look at unjust debt in any other context, you’re not going to look and see like, oh, you know, Bank of America defrauded 15 million people. So let’s get them refunds, but wait, first let’s make sure that none of the people getting refunds make too much money.

[00:21:36] Like, no, no, that’s not that’s not how that works. Right? If you think that this is an unjust system, then you have to give relief to everybody. It’s not a question of who can afford what. I mean for all the good reasons that we’ve been talking about how this actually works, but also just conceptually of justice.

[00:21:52] Jalil Bishop: And make no mistake, the Department of Ed, as it currently is functioning with this student loan portfolio would qualify as a predatory lender. Trapping people in loans where they’re only increasing imbalances, where their payments will never equal an end you know, bona fide predatory lending kind of 101.

[00:22:10] And if they were a private bank, we would be trying to hit them with all types of settlements and fraud testimony. I mean, congressional hearings. So it’s something to just also call out that by all definitions, they would fall into a predatory lender.

[00:22:26] Shanna Bennett: And I think at the sake of sounding redundant, just the very definition of student loan is money borrowed from either a public or private institution to cover higher education expenses. And if you are borrowing those funds, traditionally you are in need. This is not a rich people problem.

[00:22:46] It’s just not. But good points. Do we want to talk about how Republicans would fight this? Because that’s also another thing if Biden does, by the flick of a pen as the Debt Collective likes to say, enacts wide-scale student debt cancellation via an executive action executive order. It would just be fought in courts and it would delay that actual action.

[00:23:10] And maybe it wouldn’t stick because of that. Thoughts, feelings, suggestions?

[00:23:16] Sparky Abraham: The mechanisms to do that are few and far between. I don’t take that concern very seriously. Let me just say it like that. I think that Congress has pretty clearly and everyone has basically agreed at this point, that Congress has pretty clearly given the President, the White House and the Department of Education, the power to cancel student debt in law in the Higher Education Act.

[00:23:39] And I think that usually when you hear this concern, it’s just kind of this very vague thing, right? Where it’s like, well, you know, the Supreme Court is going to strike it down. But you think about how that actually works. In order to actually challenge an executive action in court, the person challenging it has to have standing.

[00:23:57] And what standing means is that you’ve suffered some kind of harm. And who is harmed by student debt cancellation? There’s an article that appeared about this recently doing a good analysis. It was in the Virginia Law Review. But, the upshot basically is that it’s very unlikely that anyone would actually suffer harm as a result of student debt cancellation, such that they would have standing. The harm has to be kind of concrete. It has to be particular. It can’t just be some vague, oh, well the government is spending money in a way that I don’t like.

[00:24:30] I mean, first of all, the government’s not spending any money to cancel the student debt cancellation. Also if that was the case, I would be suing about every single dollar going to military spending and imperialism. Maybe that would be better, but you can’t actually do that. There just really isn’t anybody who could come through to a court and say, I am entitled to stop this because it’s hurting me. Because in fact it doesn’t hurt anybody.

[00:24:52] It benefits 45 million people and it hurts no one. I personally don’t take that threat very seriously. I think it’s mostly just a talking point.

[00:25:02] Shanna Bennett: Oh, okay. So from someone that is not in any way a legal professional, my understanding was that the opposing actors would basically say, hey, this is unconstitutional. Like, no, this is not what the Higher Education Act of 1965 is supposed to be used to do. This is a misinterpretation. And so now we are bringing this to the courts.

[00:25:24] That’s how I understood it. But you’re speaking about it a different way, kind of as if it affected somebody individually.

[00:25:32] Sparky Abraham: Yeah, that’s right. Article Three of the Constitution says that in order for the federal courts to be able to decide anything, a dispute, there has to be a harm. There has to be standing. A lot of times we kind of fall into this way of speaking where it’s like, oh, if something is unconstitutional, if something is illegal, then of course a court’s going to step in and stop it.

[00:25:52] And you here, obviously, there is nothing about this that’s unconstitutional or illegal. So it’s kind of a sprays argument to begin with. But, no, no, actually the mechanism by which that has to happen is that Someone has to have standing to challenge it. And that standing generally requires harm.

[00:26:07] And as I said, the article that I mentioned in the Virginia Law Review, goes into some detail on various actors who could maybe try to argue that they have been harmed and why those arguments wouldn’t work. Like for example, the private companies that get federal contracts to service student loans, claim that they would be harmed.

[00:26:26] And then the law review article, I think does a really good job of explaining why well, no, actually federal contractors who want money from the federal government to take actions generally can’t sue the federal government, just because it does something that will affect their ability to get future contracts on an issue that doesn’t exist anymore.

[00:26:44] Right. So if you want more details, I would say, go check out the article, but just the general features of how legal challenges work is that somebody has to have suffered as a result. There has to actually be a dispute and without anyone suffering harm from debt cancellation, there’s just not going to be a dispute.

[00:27:01] Shanna Bennett: Interesting.

[00:27:02] Jalil Bishop: I also think, just adding on to that quickly, is that if we’re thinking as the Biden Administration makes some type of press conference about every week. If we’re thinking about racial justice and what it means to do policymaking that has that at the center of it. Imagine we would be as a country if we say we’re not going to do anything, unless we know that somehow it’s not going to be challenged in the courts. And I think that the idea that that should slow down anyone from doing what is just and has a policy stance and a legal standing behind it again, it’s a part of just this political theater. I mean, we have watched in the last administration and even in this administration that all types of policies and legislation and executive orders come to pass without even close to the level of evidence that we’ve built around student debt cancellation, whether or not it’s legal is going to stand up in a court.

[00:27:56] And it definitely should not be kind of the measuring stick or whether or not we should pursue this policy based on the history of what racial justice requires. But definitely just in a moment of time where we were seeing executive orders built on way less evidence in a way less of a foundation than we have right now.

[00:28:14] Shanna Bennett: That’s a very good point. And the goal of making space for this conversation too, is so that we have some things in our back pockets that we can say when we’re engaging people in this kind of dialogue. That’s great. It’s good to know. I figured we could switch gears again and talk about who actually benefits from wide-scale student debt cancellation.

[00:28:34] I know that again, the talk seems to be leaning lately towards this idea of it benefiting the wealthy or going to, folks that went to Ivy league schools. So thoughts on that? Who actually benefits?

[00:28:58] Laura Beamer: Man, I feel like we all have some really great stats in our pocket, for this question. But we all know there’s 45 million student debtors in the States. That’s one in six people. And so it makes sense that student debt is a very ubiquitous problem. It seeps into every community in this country.

[00:29:18] I have specialized in making maps of the United States and the US territories and student debt burdens across those areas. I can tell you that there is bad student debt. There are really bad burdens in every single part of the country and the US territories. In deeply Republican areas, in deeply Democrat areas, borrowers are hurting.

[00:29:47] And we also know that the pool of borrowers is growing. Student debtors are getting more diverse. As college becomes more accessible, student debt is getting harder to repay, so borrowers are getting older. And we know that also some communities are getting hit harder than others.

[00:30:08] So places with education deserts are more where predatory for-profits are more rampant, borrowers are getting really hurt. They’re facing higher prices. They’re borrowing more. It’s taking them longer to repay. The same is true for black and brown communities. That has to do with systemic issues like the racial wealth graph, and wage disparities, same goes for the gender wage gap.

[00:30:34] Women are taking longer to repay as well, because of systemic issues. Who’s going to benefit from student debt cancellation? All of those creeds of people that are suffering from the crisis. But the people that will be impacted the most that will benefit the most are those with the highest burdens. Which are low income borrowers, black and black and brown borrowers, people that went to for-profit schools, and especially people that don’t reap any benefit whatsoever from the college that they attended, or the education that they have.

[00:31:09] So those are the people that stand to gain the most from cancellation.

[00:31:13] There’s this regressive student debt cancellation argument which we’ve already talked a little bit about. But just the definition of how progressive the policy is, based on debt to income ratios, people of lower income have higher debt to income ratios.

[00:31:30] It’s very clear in the data. So if you can lower someone’s debt to income ratio, the most, you want it to be low income borrowers and that’s literally what debt cancellation does for them. It lowers their debt to income ratio much, much more than high income borrowers. But again, if you have student debt at all, it’s a marker of financial need.

[00:31:50] So I want to make that absolutely clear.

[00:31:56] This whole dynamic is so frustrating. My personal experience, which is not data, but my experience as an attorney, working at mostly legal aid organizations and helping people with student debt is just so wildly divorced from the way that people talk about this.

[00:32:11] Sparky Abraham: It’s mind boggling. I have clients who went into default on their student debt, even though they had a job, but they couldn’t afford housing and food. And then the federal government starts garnishing their wages. I’ve had people who said, I just found it too stressful.

[00:32:24] I quit my job. Moved back with my parents, started doing gig work because I knew that that was something they couldn’t garnish. And like that would just take the stress off of it for me. Meanwhile, through the years their balances grow due to interest in collection fees.

[00:32:37] Shanna Bennett: Wow.

[00:32:38] Sparky Abraham: People having their social security garnished, getting contacted by debt collectors, saying you’re gonna lose your housing.

[00:32:43] One of the experiences that I had when I was working as a legal aid attorney in Oakland, was going to these events that are called stand downs. They’re like service delivery events for unhoused veterans. And I did not necessarily know what I was going to encounter, going to these events and offering to help people with their credit.

[00:32:58] Obviously credit is a major factor to try to get housing, to try to do a lot of things in life. I wasn’t sure if people were going to want help with their credit or if they were going to be mainly there to get medical care or everything else. But what I found was just enormous numbers of people, like 8, 10 hours a day of back-to-back interviews for three days in a row worth of people who wanted help with their credit. And specifically with student debt. The overwhelming majority of people coming through with student debt issues going back decades with amounts that are just so insanely high. And these are people who were unhoused or living on public benefits. If anything, at all, often those public benefits were being garnished for their student debt whose balances had blown up from hundreds of dollars to thousands, tens of thousands of dollars due to interest and collection fees and the rest of it. And participating in this sort of discourse it’s just so frustrating because these entire populations just get totally written out of the discussion. Not to mention the fact that, I’m sure Jalil’s got a response here too I know. I think 40% of people with student debt don’t complete a degree, right? Where are they in these discussions? What are we even talking about here? It’s very, very frustrating and sometimes enraging and sometimes disheartening. But I would just say go talk to any legal aid attorney who does consumer stuff.

[00:34:22] I promise you, they’re going to have a very different view on the student debt crisis from whatever think tank is saying, we need to limit things for moral hazard or fiscal responsibility or whatever. Bullshit.

[00:34:33] Shanna Bennett: Right.

[00:34:36] Jalil Bishop: Yeah. And I think, adding on top of, both points around the absurdity of having to even push back against the face of a borrower, being a rich person, is to answer this question, of who’s going to really benefit. And I think we should always remember that we are talking about borrowers again, who had a financial need, who by all evidence have zero or negative wealth. The majority of borrowers we’re talking about are parents. I thought about this idea all the time that there was a report that came out that said if we gave low-income parents a $6,000 grant instead of a $6,000 parent plus loan, that that would eliminate the need for parent plus loans for the majority of low income parents for 85% of low income black parents.

[00:35:22] If we use a $6,000 grant over a loan. I think about veterans who did serve in the military and try to get their debt forgiveness and haven’t been able to get access to that benefit. Black borrowers, who already are coming into higher education and attending institutions that are under-resourced or institutions that are intentionally predatory having to take on more student debt than any other group and not seeing that return. That’s who would benefit from cancellation. And then really, as we said before, the everyday taxpayer who increasingly would see their fellow citizens be able to participate in our economy. And that’s from being able to take care of themselves, being able to contribute to the economy, being able to grow small businesses, and having their own personal savings account.

[00:36:06] That’s a benefit for us all by not having 45 million people under this debt burden. I think there’s also a big piece here. There’s this idea that a rich person will benefit. We have to realize that this is a conservative, talking point funded by many conservative foundations and that a lot of the researchers who continue to push the Ivy league borrower, the Harvard doctor, who’s going to benefit are people who are intentionally putting out misleading findings.

[00:36:36] And a part of the frustration is that you’re talking about everyday people who we know are struggling, who are suffering the consequences not only economically from their mental health. Parents who are thinking about how they’re going to handle their student debt and their children’s student debt as their children become college age. Parents who are trying to figure out how can I retire when I have six figure debt and a low retirement.

[00:36:58] So there’s just so much devastation that student loans is inflicting on the everyday person I went to an Ivy league school. I’m not even sure if my rich peers at that Ivy League school could even spell FAFSA, but let alone, they had to use student loans to get through.

[00:37:12] So the idea that I have to spend time, even pushing back against that and not be able to lift up the stories of people who are really being harmed by his policy is absurd. But I also understand that it’s intentional by many people not to see everyday people benefit from government policy. And they don’t like to see policy solutions that are brought to the center by grassroots movements.

[00:37:33] And I think the debt cancellation is one of those policies that we have been building for years. And we have a moment where we have built to push back against so much of the BS and build so much power that is at the center of the conversation. And we should be clear that that pisses off a lot of people. Not your everyday person, but just a lot of elites who are used to controlling this conversation.

[00:37:54] Shanna Bennett: Right, right. Excellent points. There’s so much more to say here. Laura, I don’t know if you have any closing remarks. I’m just so conscious of our time and your time.

[00:38:08] Laura Beamer: I guess my closing remark would be that. Then people say, oh, you can’t cancel and leave the system as is. And none of us are saying that. Of course the system needs to be fixed. We need a drastic solution for the system fix as well. It will also do the honors of hopefully reinvigorating Congress to reauthorize the Higher Education Act of 1965, which they haven’t done since 2008. It’s very overdue. So if they can’t do that, then why isn’t cancellation a good opportunity for us to right the system if we have to. And then the answer is free college, honestly moving forward, for everyone I can pick up on that free college point. I think it’s something that’s really important that we spend anywhere from eighty to a hundred billion dollars on the federal student loan program. We spend almost $55 billion a year funding very affluent well-off families to do tax-free college savings.

[00:39:12] Jalil Bishop: We spend only around 35 billion on Pell grants. They used to cover 80% of college costs but now less than 30%. We spent a lot of money already subsidizing higher education and funding higher education. So there’s not a question of where we get the money, it’s already there.

[00:39:29] The question now is how do we redirect these resources so that it’s actually benefiting the student and not benefiting actual rich families. Not benefiting the loan servicer, the debt collectors, the private law firms that go after borrowers and make hundreds of millions of dollars each year.

[00:39:45] Those different profit driven actors. So I always like to make clear when we’re talking about free college that the money is already being spent. The question is why do we continue to waste taxpayers’ dollar spending in a way that doesn’t actually get to the benefit of providing accessible higher education, but it does allow these profit driven actors to continue to win?

[00:40:07] It does allow us to continue to uphold massive inequality by not providing higher education as a public good. I think that’s what’s at stake. When we talk about free college, it’s not coming up with a whole new source of money. It is saying we’re wasting so much money right now for a corporations’ bottom lines, when they could actually be for the everyday person’s social mobility and future and livelihood.

[00:40:29] Sparky Abraham: Yeah.

[00:40:30] Jalil Bishop: And it’s more efficient, it’s better and definitely more just. So I just feel like we have to underscore it every time and that it’s not a pie in the sky idea. It’s really like an obvious idea that we should be doing decades of study.

[00:40:43] Shanna Bennett: Right. You’re a reallocation of funds, essentially. Good points. We are out of time. This has been so great. If you guys are open to it, I would love to do this again. It’s a very meaty topic and there’s just so much to discuss. Thank you so much.

If you liked this episode of Matter of Life and Debt, subscribe and share it with a friend. It really helps people discover us. Matter of Life and Debt is hosted by me. Shannon. It is produced by Shannon Bennett, Emma Klauber, and Nikki Nolan.

[00:41:27]It is edited by Nikki Nolan and Talia Mole, transcripts and writing is done by Emma Klauber. Efe Akerman created the theme music.

Visit our website www.matteroflifeanddebt.com, where you can listen to more episodes, access transcripts, and get additional context for the subjects you just heard about. Absolutely for free the website again, www.matteroflifeanddebt.com.

Thanks again for listening.

Podcast: Play in new window | Download

Subscribe

Listen on