Cumulative student loan debt in the United States has reached an astonishing $1.2 trillion, and it’s rising quickly. It shot up 20 percent just from the end of 2011 to May 2013, faster than even the growth of revolving credit products like credit cards. On average, the student loan debt held by 25-year-olds has gone up 91 percent in the past decade. The problem is exacerbated by tough economic times—nearly one-third of borrowers who have begun repayment are seriously delinquent.
And, as is true of so many issues, Congress has struggled to do anything substantial to solve the problem. Last summer, after it failed to come up with new student loan lending laws, Congress at the last minute prevented student loan interest rates from doubling, but only for new borrowers—no doubt a good move, but tiny in the face of such a large problem. Democrats also attached a measure to the Affordable Care Act that limits repayments to 10 percent of income and forgives debt after twenty years, which is beneficial but similarly a decidedly small-ball approach to the crisis.
Most higher education analysts agree drastic measures are needed—and to that end, a new coalition launched this week that aims to push forward radical ideas on how to both reduce the current student loan debt burden, but also make college more affordable going forward.
The “Higher Ed Not Debt” campaign is a coalition made up of a wide variety of groups: big unions (ranging from education unions like AFT and NEA, to bigger labor groups like the AFL-CIO, SEIU and AFSCME) to standard progressive organizing outfits (Progress Now, Working America and Jobs With Justice, to name a few) to big think tanks like the Center for American Progress and Demos.
It has four essential goals:
Provide support to borrowers now paying off the $1.2 trillion in student loan debt.
Change state funding and financial aid structures to address both the declining quality and increasing cost of higher education.
Address the role of Wall Street in the increasing financialization of student loan products, as well as the privatization of funding outlets.
Civic engagement and education on what it means to take on student debt, and how to push legislators to find better answers.
Higher Ed Not Debt’s roadmap is pretty broad—maybe dangerously so, unless they really have the funding, manpower, and wherewithal to pull it off. The coalition will produce extensive reporting and research on the higher education crisis and particularly Wall Street’s role, and also—presumably with the help of the aforementioned think tanks—produce concrete policy proposals. It will naturally have a communications strategy to push out the message, alongside a grassroots organizing push in at least five states to recruit citizens to demand action. Finally, the group plans to get involved in elections to push candidates towards its preferred solutions.
The campaign launched Thursday at the Center for American Progress with some big-name speakers: Senator Elizabeth Warren and AFT President Randi Weingarten.
Warren took a broad approach to the crisis, noting one fundamental problem: only the wealthy are able to avoid the student debt crisis. “If you’re not rich in America, college costs more. It costs more because you have to borrow the money, and pay and pay and pay,” she said. “As a matter of federal policy, we’ve penalized those young people by saying ‘You’re going to pay more for your education than people who have the blessing of being born to a family that can pay for it up front.’”
She noted that the federal government profits from this arrangement—based on the loans made between 2007 and 2012, the Treasury will bank $66 billion in profits. Warren pushed several proposals that for now are stuck in the Senate, but that the campaign aims to prop up.
One such idea is to enact the Buffet Rule, which closes tax loopholes for the wealthy, and use the money to reduce student interest loan rates. Warren is working with Democratic Senators Dick Durbin, Jack Reed, and Kirstin Gillibrand on a bill that would take the savings from the Buffet Rule and allow students currently holding loan debt to refinance down to 3.86 percent—and if enough savings were brought in from the Buffet Rule where all students could do that and there was still money left over, then allow for refinancing at an even lower rate.
“I think about it this way because I think about the choice America makes. Think about this. Right now in order to finance United States government, we take in billions of dollars in profits off student loans, but permit billionaires to have enough loopholes that they pay at tax rates that can be lower than those of their secretaries,” she said. “It’s about values. Where, as a country, do we believe we should make our investments? Follow the money on this. Invest in billionaires or invest in students. Well, I want to put my money on students.”