[blind-democracy] FW: How Were 46 Million People Trapped by Student Debt? The History of an Unfulfilled Promise

From: "Miriam Vieni" <miriamvieni@xxxxxxxxxxxxx>
To: <blind-democracy@xxxxxxxxxxxxx>
Date: Thu, 17 Sep 2020 13:49:46 -0400

From: Economy for All <info@ind.media>
Sent: Thursday, September 17, 2020 1:10 PM
To: miriamvieni@xxxxxxxxxxxxx
Subject: How Were 46 Million People Trapped by Student Debt? The History of an
Unfulfilled Promise

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How Were 46 Million People Trapped by Student Debt? The History of an
Unfulfilled Promise

It is long past time to recognize that the cruel experiment in financing higher
education through student loans has failed.

By Mary Green Swig, Steven L. Swig, David A. Bergeron, and Richard J. Eskow

The democratic principle of tuition-free education in our country pre-dates the
founding of the United States. The first public primary education was offered
in the Massachusetts Bay Colony in 1635, and its legislature created Harvard
College the following year to make education available to all qualified
students. Even before the Constitution was ratified, the Confederation Congress
enacted the Land Ordinance of 1785
<https://go.ind.media/e/546932/w-Land-Ordinance-of-1785/gqc6bl/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
, which required newly established townships in territories ceded by the
British to devote a section of land for a public school. It also passed the
Northwest Ordinances
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, which set out the guidelines for how the territories could become states.
Among those guidelines was a requirement to establish public universities and a
stipulation that “the means of education shall forever be encouraged.” After
the nation declared independence, Thomas Jefferson argued for a formal
education system funded through government taxation.

Jefferson’s vision took form over the course of more than a century, as state
and local governments began creating primary schools and then high schools. The
federal government became involved in higher education in the 19th century with
the creation of land grant colleges and other institutions, used primarily to
teach agriculture and education after the Civil War. These institutions created
opportunities for people who had long been locked out of the learning process,
including formerly enslaved African Americans and impoverished people of all
races.

State universities and colleges rapidly expanded as well. By the middle of the
20th century, low-cost or tuition-free education was available in many American
states. After the Second World War, the federal government once again turned to
education to promote opportunities for its citizens and economic growth for
all. The G.I. Bill paid educational expenses for 8 million people, without
regard to individual wealth, which helped create a robust middle class and
contributed to the vibrant growth economy of the 1950s and 1960s. While those
opportunities were still denied to many people as the result of racism, efforts
were underway to improve educational access for people of color.

The Reagan era ushered in a belief that government programs, including
education, stood in the way of people’s dreams and should be severely cut back.
Public goods came to be seen as investments, ones that were purely economic in
nature. For these reasons, among others, a nation that had expanded publicly
funded education for centuries decided to reverse course. Instead of funding
higher education on the principle that it benefits us all, the country began
shifting the cost to individual students.

In the 1950s, as part of the National Defense Education Act, student loans were
created
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  as an experiment in social engineering. Concerned about competition with the
Soviet Union, policymakers wanted to increase students’ capabilities in math
and sciences. To do that, the country needed more teachers. So, lawmakers
offered loans to college students, with the opportunity to have half the loan
canceled after 10 years if they became teachers.

The experiment failed. Researchers have not been able to prove
<https://go.ind.media/e/546932/-selected-outcomes-d-3306-ashx/gqc6bq/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
  that the student loan program led more people to become teachers, despite
multiple attempts to do so. The experiment was also cruel. Over the years, the
student loan program was expanded, with the claim that a student’s personal
investment in their education was an “investment” that would pay off in higher
wages. Banks and other private lenders were brought into the process and given
considerable incentives and subsidies to issue student loans, without
considering the burden being imposed on the student. This financial opportunity
was given to banking interests that were already wealthy, with little thought
of the resulting damage to an economically sustainable future.

Proponents of financializing the cost of higher education argued that it was
cheaper to lend money to students than it was for federal and state governments
to provide grants for their education, even after paying subsidies to the
private sector for their loans. An entire industry grew up around this process.
State and nonprofit guaranty agencies were created to insure the loans. These
agencies got paid, no matter what: when loans were issued, when loans became
delinquent, when borrowers defaulted, and when they collected on defaulted
loans.

In response, most states created guaranty agencies so they could make money
from people who needed to borrow to pay for ever-increasing tuitions and fees.
Now, states had an extra incentive to cut funding for public higher education.
Not only would they save on expenditures, but they could increase the need for
students to borrow, which increased their revenue. In many cases, these
guaranty agencies don’t handle the loans themselves. They pass the work on to
private debt collectors who take collection fees and are aggressive in their
handling of cases.

The system took on a life of its own. By the mid-1990s, student loans had
surpassed grants in funding students’ higher education. But a system built on
debt financing only works if borrowers pay back their loans. That led Congress
to make the system even crueler with the Bankruptcy Amendments and Federal
Judgeship Act of 1984, which exempted student loans from bankruptcy proceedings
and subjected borrowers to draconian collection tools. These tools included
wage garnishment without a court order and the seizure of Social Security
checks and tax refunds. The Clinton and Obama administrations attempted to
lessen the burden slightly by allowing the federal government to lend directly
to students while introducing income-based repayment options, but the system’s
fundamental cruelty remains unchanged today.

It is time to recognize that the cruel experiment in financing higher education
through student loans has failed. It has captured 46 million people and their
families in a student loan trap, including people who received vocational
training, and has weakened the financial strength of higher education.
Inescapable debt is a major driver of social collapse
<https://go.ind.media/e/546932/escapable-regardless-size-loan/gqc6bs/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
. It has made the racial wealth gap worse and weakened the entire economy, as
debt holders are prevented from buying homes or consumer goods, starting
families, or opening new businesses. It’s time to restore funds for higher
education and cancel student debt for the victims of this failed experiment.

Learn more at Freedom to Prosper
<https://go.ind.media/e/546932/2020-09-17/gqc6bv/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
.

Mary Green Swig is a senior fellow at the Advanced Leadership Initiative at
Harvard University and co-founder of Freedom to Prosper
<https://go.ind.media/e/546932/2020-09-17/gqc6bv/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
.

Steven L. Swig is a senior fellow at the Advanced Leadership Initiative at
Harvard University and co-founder of Freedom to Prosper
<https://go.ind.media/e/546932/2020-09-17/gqc6bv/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
.

David A. Bergeron is a senior fellow for postsecondary education at the Center
for American Progress
<https://go.ind.media/e/546932/person-bergeron-david-/gqc6bx/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
. Bergeron previously served as the acting assistant secretary for
postsecondary education at the U.S. Department of Education.

Richard J. Eskow is senior adviser for health and economic justice at Social
Security Works
<https://go.ind.media/e/546932/author-rjeskow-/gqc6bz/690838413?h=R1BB7ItvMyMcgnSdFXJtWNN0_RR67YiB8q987FRsrAg>
. He is also the host of The Zero Hour
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, a syndicated progressive radio and television program.

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Follow-Ups:
- [blind-democracy] Re: FW: How Were 46 Million People Trapped by Student Debt? The History of an Unfulfilled Promise
  - From: Carl Jarvis

[blind-democracy] FW: How Were 46 Million People Trapped by Student Debt? The History of an Unfulfilled Promise

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