This article originally appeared in the November 2013 edition of The Progressive.
By Scot Ross & Mike Browne
Sara Graves is a married, thirty-year-old mother of three with a college degree. She also has upwards of $25,000 in student loan debt, on which she pays an interest rate of 6.5 percent. She's one of nearly forty million Americans who collectively owe in the neighborhood of $1.2 trillion in student loan debt. That accounts for the second largest consumer debt in the country, exceeding credit cards and car loans and trailing only mortgage debt.
When discussing her situation, Graves worries about her children. "I made the correct decisions," she says, "but the extra burden of the student debt that I'm dealing with right now is definitely delaying our initial plan of saving money for our children so that they wouldn't be in this position."
As a working, single mother in her early twenties, Graves decided her best path to a good middle-class life was to enter college as a nontraditional student. Her determination and drive were clear.
"I sat down with my adviser," she said. "I figured out exactly which courses I needed to take to get my degree. I didn't have any extra fluff courses in my curriculum. I completely just went straight through, worked really hard, got the credits that I needed to get the degree, and in the end it cost me more money than it would have had I just gone about it nonchalantly and not rushed my way through it."
Graves attended college year round. But because of the limitations on yearly aid, she racked up student loan debt she would have otherwise avoided had she taken longer to graduate.
Like millions of other college graduates, Graves is carrying around a debilitating debt.
As Senator Tammy Baldwin puts it, student loan debt is "a defining issue of our generation." Since 1985, college tuition has gone up 559 percent, and with it, massive indebtedness. In a nationwide survey of more than 61,000 individuals conducted by One Wisconsin Institute, those with student loan debt reported an average length of repayment of twenty-one years, ranging from seventeen years for those with some college but no degree up to twenty-three years for debtors with graduate degrees.
Respondents shared some of the real-life economic consequences of this debt. Rates of home ownership were 36 percent lower among individuals still paying on student loans versus those who have already paid them off. And almost two out of three of those currently repaying a student loan purchased a used car instead of a new one.
Robert Hiltonsmith, a policy analyst at Demos, a New York-based public policy organization advocating for economic justice, authored a recently released report with even more sobering statistics about the wealth loss attributable to the student loan debt crisis.
A household headed by two adults who both took out average loans to graduate with bachelor's degrees is saddled with a debt of about $53,000. This translates into a lifetime wealth loss of nearly $208,000, the Demos study calculates. Students from low-income families, students of color, and for-profit students will lose even more, the study said.
Even having a job in the field you have studied for is no guarantee you can meet the demands of your student loan payments.
Robert Applebaum was an assistant district attorney in Brooklyn, New York. Having gotten his law degree in 1998, he was saddled with around $65,000 of debt. A self-described "former Republican," Applebaum comes from a family of law enforcement, including a father who was a New York City police officer.
"I wanted to serve my community and make it a safer place to live," Applebaum says.
Unfortunately, he could not afford rent, living expenses, and his student loan payments on a starting assistant district attorney's salary of $36,000. He went into forbearance, meaning his student loans did nothing but amass interest exponentially. After five years in the DA's office, his loan had swelled to $85,000 and with no solution in sight, he made the decision in 2004 to leave his job and go into the more lucrative private sector.
He regretted leaving a job in public service he loved, but felt no other choice. In 2009, public service loan forgiveness went into effect, which included income-based repayment followed by loan forgiveness after ten years. But this program serves only a select segment of the population, and he was long out of public service when it began.
With the tenacity of a former prosecutor, he has made justice for student loan debtors his next case. In 2009, he authored a column entitled "Forgive Student Loan Debt to Stimulate the Economy" and, based on the massive response he received, founded StudentDebtCrisis.org.
President Obama and Democrats in Congress have tried to address this crisis. They backed legislation to keep the interest rate on federal student loans at 3.4 percent. In July, Republicans failed to act before rates doubled to 6.8 percent. A month later, the Democratic leadership "blinked" and acquiesced to a deal that, while keeping rates below 6.8 percent for the moment, will cost borrowers billions more in interest over the next decade.
Shortly thereafter, Obama announced a new plan to "shake up the current system" and "rethink the way in which we pay for higher education."
The President's new plan would allow all borrowers to cap their federal student loan repayments at 10 percent of their income. It would also notify borrowers that this option is available to them, tie financial aid to college performance based on an as-yet undetermined rating system, and promote a variety of initiatives to encourage "innovation and competition" in higher education.
There is broad agreement among progressive advocates that expanding income-based repayment options to more Americans would be a big win, though it would require Congressional approval, which seems unlikely.
"Every American borrowing student loans needs the option of income-based repayment plans that will work for them today," says Anne Johnson, executive director of Generation Progress, the youth division of the Center for American Progress.
The American Federation of Teachers also praised Obama's expanded income-based repayment option. But it raised a serious question about his "innovation and competition" proposal, warning that it "amounts to Race to the Top Goes to College." It cited pitfalls of linking financial aid to arbitrary measures of college performance. It noted the possibility the policy could create "perverse incentives that will devalue community colleges and non-degree-seeking learning, disincentivize colleges from admitting students with disadvantaged backgrounds, and devalue teaching and learning in favor of what is easy to measure."
The federation also pointed to problems at the state level.
"The major contributor to rising college costs is state disinvestment in higher education," it said. "We want a plan that encourages investment in all states."
Their analysis certainly holds true in Wisconsin. In an austerity budget that would make Representative Paul Ryan smile, Governor Scott Walker and the GOP-controlled legislature in 2011 enacted the largest cuts to public education in state history and slashed the budgets of both the University of Wisconsin system and technical colleges. They also allowed the university system to raise tuition by 11 percent over two years, socking students with $107 million in higher tuition while providing exactly zero dollars in increased state financial aid.
Walker was not the first governor to give higher education short shrift among competing budget priorities in Wisconsin, although his was the most egregious, given the massive transfer of wealth he lavished on the rich and corporations in the form of tax breaks.
In states with more progressive governors and legislatures, some are considering offering income tax offsets for the interest paid on student loans, as one can currently do with home mortgage interest. (And at the federal level, Representative Mark Pocan of Wisconsin has introduced legislation to allow borrowers to refinance their federal student loans the way you can with your mortgage.)
We need a return to the idea that public education is a public good and ought to be publicly supported, and a commitment to ensure that higher education provides a path to the middle class, not a multidecade debt sentence.
Fortunately, a lot of progressive groups are coalescing on this issue. Jobs With Justice has joined together with the United States Student Association and Student Labor Action Project to target Sallie Mae, the largest private profiteer in the student loan market. Under pressure, Sallie Mae recently became the fiftieth organization to drop its membership in the corporate American Legislative Exchange Council.
Among the other organizations working to make a real difference in the fight on the higher education front are the U.S. Public Interest Research Group, the Institute for College Access and Success, the Working Families Party, the Young Invincibles, and such unions as SEIU, AFSCME, and the NEA, as well as the AFL-CIO.
The question remains whether our elected officials will listen and come up with real solutions, or whether hard-working young men and women like Sara Graves and Robert Applebaum will continue to be punished for wanting their shot at the American Dream.
Scot Ross is the executive director and Mike Browne is the deputy director of One Wisconsin Now, a statewide progressive advocacy group based in Madison, Wisconsin, and an affiliate of the ProgressNow national network.