A Loan Again, Unnaturally

***Updated 12/1/20 10:45 pm EST

One of the major motivations for first-time, younger voters this past November is the absurdity of their level of US student debt from post-secondary education. With tuition costs rising at double the rate of inflation, that key to upward mobility – specialized training and education – slammed into the lives of Y and Z generations like a tsunami after a major earthquake. Average debt for a four-year undergraduate education is almost $40 thousand, and for those beyond in professional schools (law, medicine, business), they often face serious six figures of post-graduation loans. Boomers never had to deal with student debt at this level, adjusted for inflation, and even Xers were not hit as hard. The above chart says it very clearly.

For profit trade schools, much like Donald Trump’s fraud-based Trump University, were and some continue to be money-churning mills based on false promises, unrealistic earning potential, and easy qualification for federally- assisted or provided debt. Under the malignant leadership of Department of Education head, Betsy DeVos, those money-mills found governmental support even as many were shuttered because of illegal practices, as the students encumbered by lingering debt (and closed schools) were for the most part left to twist in the wind. While there were theoretical outs for defrauded students, DeVos found ways to make debt relief complex if not completely elusive. Educational loan forgiveness has become a hot political issue.

Simply put, Betsy DeVos has always been all about protecting the creditor schools, regardless of their misfeasance. At the virtual 2020 Federal Student Aid (FSA) Training Conference on Tuesday [12/1], “DeVos took aim at proposals to cancel student debt, a proposal that the incoming Biden administration campaigned on, calling debt forgiveness ‘the truly insidious notion of government gift giving.’… ‘We’ve heard shrill calls to ‘cancel,’ to ‘forgive,’ to ‘make it all free,’ ’ Devos added. ‘Any innocuous label out there can’t obfuscate what it really is: wrong.’… She also condemned the Democrat-supported idea of providing free college to lower-income Americans, calling the proposal ‘a socialist takeover of higher education.’” Yahoo! Finance, December 1st. An ultra-right wing “let them eat cake” billionaire heiress, DeVos’ callous disdain for students in need, defrauded and misled, is hard to fathom. That calls herself a Christian borders on the absurd.

“New forgiveness aside, the mechanisms through which defrauded student borrowers or borrowers who served 10 years in public service (from veterans to firefighters) can apply for debt discharge have broken down, especially during the Trump administration.‘…One of the most frustrating and heartbreaking things, talking to thousands and thousands of student loan borrowers over the years, is that borrowers are entitled in many instances to have their loans totally forgiven and given a second chance in their financial lives, under the system that Congress created,’ Seth Frotman, head of the nonprofit Student Borrower Protection Center (SBPC), told Yahoo Finance… What has happened over time, according to Frotman, ‘is that incompetence at the Department of Education and illegal practices within the student loan industry has unnecessarily and unconscionably blocked borrowers from the relief that they were promised under law.’” Yahoo! Finance, November 25th. Many believe it was not DOE “incompetence,” as you can clearly see from DeVos own words above.

For those who did not complete their degrees, even at the most legitimate institutions of higher learning, the student debt remained even as the earning-improving degree was never obtained. For those who did graduate, a hostile job market, amplified by a housing affordability crisis and an economy crushing pandemic made that which was intolerable impossible. The revision of the US Bankruptcy Code in 2005 made bankruptcy relief from student debt well-neigh impossible. 

Although the Republican Party seems not to have noticed, almost 60% of Millennials (a number that seems to be rising with even younger generations) have received at least some formal post-secondary education. Most carry student debt. Two-thirds of those first-time voters cast their ballots for Joe Biden, who promised to address this excessive debt load through a program of student loan forgiveness. Having never lived through the red scare and the anticommunism that drove US foreign policy for decades after WWII, these debt-carriers reject the misapplied accusations of “socialism.” They just do not care. Younger voters are growing. Older voters are dying off. Hint!

The groundswell of ignorance that actually conflates social programs – like Social Security, Medicaid, SNAP food programs, universal healthcare – with government ownership of societal wealth (land, factories, business, farms, etc.), which is the true definition of “socialism,” continues to lead uninformed voters by the nose. The exceptional attraction of a very large segment of Millennials and Z’s to “Democratic Socialist” Bernie Sanders and the Progressive “Squad” in the House of Representatives is very telling. Changes are afoot. 

If Artificial Intelligence continues to replace an increasing number of college-education-required jobs, you can certainly look to a rise in the potential escalation of true socialist alternatives in mainstream American politics. If the economy will not reignite rapidly after the pandemic is under control, you can expect pressures to implement direct government employment in infrastructure projects a la FDR’s New Deal. If by some miracle, Joe Biden is able to overcome the expected congressional gridlock and architect a path to some form of federal student loan debt relief, the policy issues that will surface will rattle our entire notion of education to its core.

Who gets loans forgiven? Everyone? Rich families and high earners? How much? Is it fair to those who paid their debts with maximum sacrifice? And what about the causes that made the debt rise that fast: “Large-scale cancellation of debt ‘doesn't solve the crisis long term,’ Kevin Carey, vice president for education policy and knowledge management at the D.C.-based think tank New America, told Yahoo Finance Live (video above). ‘Everyone acknowledges that if we don't change the underlying system that produced that debt in the first place, whatever debt we forgive, the total amount will just start to rise again.’

“The fundamental issue, according to Carey, is a system where ‘the federal government printing money and lending it out based on what colleges choose to charge.’… In other words, the real problem is that the average cost of total tuition, fees, room and board rates charged for full-time undergraduate students in degree-granting institutions in the U.S. has increased more than two times the general U.S. inflation rate.” Yahoo! Finance. Professors in business or professionally-directed fields are being paid at unprecedented salaries, many into mid-level six figures, which when added to their outside consulting and publication fees has made many academics into millionaires.

For students at prestigious public universities in Germany, where student fees are negligible and tuition non-existent, there is no student debt crisis. Yet Germany continues to produce products of exceptional technological quality, provide scientific and financial services at the highest level and sustain one of the most robust economies on earth. As we face a flurry of unfounded, if not patently absurd, conspiracy theories and a narcissistic President, not giving any thought to American pandemic victims and unwilling to relinquish his office after a sound thrashing at the polls, it most certainly time to question whether the United States has the best economic and political system in the world… or even an average one.

I’m Peter Dekom, and if it walks like a duck and quacks like a duck…