Amanda Boehm-Garcia
Many political pundits told us that “economic anxiety” put Donald Trump in the White House. Millions of Americans suffering the anxiety of crushing student debt could help remove him.
There are an array of issues, both foreign and domestic, that Donald Trump is set to bungle catastrophically, but there is one single issue that directly affects economic opportunity for all Americans.
That issue is public education.
Trump’s Education Secretary, Betsy DeVos, lacks the most basic knowledge of, expertise in, and commitment to public education. What she does have is a personal fortune she’s used to underwrite propaganda and fatten the campaign accounts of Republican politicians.
In Wisconsin alone, the DeVos family doled out more than $400,000 to state legislators and Governor Scott Walker. Her shadow campaign operation, American Federation for Children, has spent at least $4.5 million to elect and solidify a Republican majority in the Wisconsin state legislature. Another $50,000 of DeVos largesse went to re-elect U.S. Senator and Ayn Rand acolyte Ron Johnson.
DeVos has been a prominent proponent of failed school voucher experiments. She has long promoted policies that helped bankrupt public schools, resegregate students, and punish teachers. And now she has turned her attention to higher education, targeting the 43 million Americans carrying more than $1.4 trillion in student loan debt.
This new venture may be her undoing. And it may help bring down her boss as well.
Student debt is a significant burden on families and a serious drag on our economy. My education and research organization, One Wisconsin Institute, found that people with student loan debt are far more likely to rent versus own a home and drive a used versus new vehicle than their peers. Student loan debt also interferes with savings for retirement or a child’s education.
Student debt is a significant burden on families and a serious drag on our economy. And the crisis is multigenerational.
A 2013 survey of 61,000 student loan borrowers showed that a four-year degree will take the average borrower twenty-one years to repay. Student loan debt is the second largest consumer debt in the nation, more than what’s owed on credit cards or auto loans. Only mortgage debt is higher.
The crisis is multigenerational. In 2014, 155,000 people over the age of sixty-five had their Social Security payments garnished because of student loan debt. And while higher education debt further exacerbates the yawning gap between the haves and the have-nots, Republican leaders have refused to move forward on common sense solutions—even those with no net cost.
DeVos has as much experience with the challenges of paying for higher education as she does with supporting public schools. Under questioning, she revealed that no one in her family has ever taken out a student loan.
Legislation championed by U.S. Representative Mark Pocan, Democrat of Wisconsin, and Senator Kirsten Gillibrand, Democrat of New York, seeks to allow student loan borrowers to refinance their federal loans. Senators Elizabeth Warren, Democrat of Massachusetts, and Tammy Baldwin, Democrat of Wisconsin, and others have put forward a similar plan.
An analysis by the Obama White House said the bill would immediately result in lower interest rates for twenty-five million of the nation’s student loan borrowers. Lower student debt obligations would leave Americans with more money to buy homes and new cars and to save for retirement and for their own kids’ higher educations.
Senate Republicans have blocked numerous votes on student loan refinancing. The House, under Generation X Speaker Paul Ryan, has not held a roll call vote on the issue.
Things are especially bad in my home state. In 2015, under Republican Governor Walker, 70 percent of Wisconsin students graduated with student debt, ranking the state fifth in the nation. The state has nearly one million student loan borrowers.
Yet the Republicans who control the legislature have refused to allow even an up-or-down vote on Democratic-backed bills to allow state-based refinancing. Both neighboring Minnesota and Connecticut have passed pilot programs to achieve this, proving that it can be done.
Student loan borrowers who worked hard to get an education, and took on the personal responsibility to pay for it, deserve to be treated fairly. Yet with DeVos heading the Trump Administration’s education policy, Republicans seem to have grown even more out of touch.
DeVos has as much experience with the challenges of paying for higher education as she does with supporting public schools. Under questioning, she revealed that no one in her family has ever taken out a student loan. Must be nice.
Juxtapose that with a young man I met while traveling across Wisconsin. He was the first member of his family to attend college, but after his tuition rose $1,600 during his first two years at a small campus within the state university system, he dropped out and enrolled in the Army.
The young man spoke of conducting daily patrols in Kandahar when he was in Afghanistan. During his limited access to a makeshift communications hut, there were times when instead of calling his parents, he would need to call and ensure his student loan payment was received.
Summing up the totality of his experience, he told me, “You shouldn’t have to go to war just to go to college.”
“You shouldn’t have to go to war just to go to college.”
Already in America, the laws are stacked against people who need to borrow for their education in favor of the banks. Federal student loans, like the high crimes of fraud, kidnapping, murder, war crimes, and treason, have no statute of limitations. On at least a monthly basis, my group learns of grieving parents who survive the death of a young adult child, only to learn that as cosigners on their late son or daughter’s student loan, they will be forced to pay its full balance.
In addition, student loans are not dischargeable in bankruptcy, a mechanism Donald Trump has used for his businesses on six occasions.
Now, under the Trump Administration, the few protections that do exist for borrowers are under threat. During her confirmation hearing, DeVos was asked by Senator Warren whether she would uphold an Obama Administration rule written to target fly-by-night, for-profit colleges that load students with crushing debt while failing to prepare them for gainful employment.
DeVos would not commit to maintaining the regulation.
The for-profit college industry is well known for leaving students with substandard marketplace skills and huge debts. The industry makes billions of dollars from the federal government by encouraging students to sign up for federal aid, and then lobbies for fewer restrictions so it is not held accountable for not delivering a quality education.
An analysis by the Los Angeles Times showed that over a six-year period, beginning in 2009, for-profit colleges generated $8.2 billion in revenue from the GI Bill. According to the Times, “Those colleges enroll only 8 percent of all U.S. students but 30 percent of the 1.4 million veterans who have used the most recent version of the GI Bill.”
And now DeVos, whose boss settled a class-action lawsuit brought by students of his Trump “University” for $25 million days before his Inauguration, is repealing consumer protections for student loan borrowers. The DeVos Education Department allows debt collectors to charge borrowers exorbitant fees on top of their loan payments. And it is working to rescind rules that require the companies that service student loans to abide by basic consumer service and protection standards in order to win federal contracts.
DeVos is also looking to reverse other parts of the Obama Administration’s overhaul of student loan rules, including rules to ensure that loan servicers working with the federal government are following the law and not misleading borrowers.
This is distressing news for those struggling to meet their student loan obligations. A shocking 70 percent of those trying to get their loans through a program that would lower their monthly payments were given incorrect information, according to the federal Government Accountability Office. Servicers misapplied payments, misplaced paperwork, failed to correct errors, and omitted necessary information about repayment options.
In January, the Consumer Protection Financial Bureau filed a lawsuit against Navient (formerly part of Sallie Mae) accusing the loan servicer of misleading borrowers about their loan repayment options. It also claims Navient used short cuts and deceptive practices to cheat borrowers of their rights to lower monthly payments.
Meanwhile, Trump’s budget calls for eliminating the Public Service Loan Forgiveness Program, which forgives student loans in exchange for ten years of public service. It applies to a number of professions, including teachers, social workers, employees of nonprofits, and doctors in rural or high poverty areas. Some 500,000 borrowers are enrolled in this program, which went into effect in 2007 under President George W. Bush.
In December, the American Bar Association filed a lawsuit against the U.S. Department of Education over changes to the program’s eligibility requirements. It says this breaks a promise that the United States government made to student loan borrowers ten years ago. The Department of Education has refused to comment, citing the pending litigation. DeVos herself, asked about the loan forgiveness program during her Senate confirmation hearing, said only that she looks forward to discussing it.
In April, twenty-one Democratic attorneys general from across the country, led by Massachusetts, sent a letter to DeVos opposing her scheme to repeal consumer protections for student loan borrowers. The letter notes that multiple investigations have revealed abuses in the servicing of student loans.
It’s fair to say, though, that Democrats haven’t exactly operationalized their advantage on student loan debt. Polling conducted on behalf of the Greater Wisconsin Committee in 2016 by respected Colorado pollster Paul Harstad, of Harstad Strategic Research, concluded that well over 80 percent of likely voters in three swing and conservative-leaning Wisconsin state senate districts supported letting student loan borrowers refinance their loans, just as people can do with mortgages.
A shocking 70 percent of those trying to get their loans through a program that would lower their monthly payments were given incorrect information.
But none of the three Democrats in these targeted races spent money talking about student loan debt refinancing on television, radio, digital, or in the mail. All three lost. Convincingly.
Contrast that with the fortunes of state Senator Dave Hansen, the affable nearly seventy-year-old former Teamster and garbageman who faced reelection in the Green Bay area. The lead author of the state’s refinancing bill, Hansen championed student loan reform, as he has since 2013. He won a close vote for reelection in 2016.
More than 80 percent of student loan debt is held by those under fifty. Generation X is the most indebted in American history, the first generation to face decades of student loan debt.
The opportunity and challenge for Democrats, whose last presidential primary pitted a sixty-nine-year-old against a seventy-five-year-old, is to speak to younger generations about the real challenges they have faced in a way that resonates. And the issue that Generation X knows best is student loan debt.
In the 2016 election, both Hillary Clinton and Bernie Sanders agreed that people should be able to refinance their student loans. Both agreed that everyone should be able to go to college debt-free, with Sanders calling for free tuition.
I would argue that this call for free college was a political misstep, as it left generations already saddled with debt out of the debate. As a student loan debtor from 1987 until my forty-fourth birthday in 2013, I feel I can speak for those who either paid student debt for decades or who are in the midst of decades of student loan payments. And the idea that we should look up from under our mountain of debt and focus on giving free college to everyone after us was a curious messaging pivot.
Decisions by both Republicans and Democrats created the student loan crisis. President Bill Clinton traded the privatization of Sallie Mae pushed by a Republican Congress for an increase in Pell Grants sought by Democratic members of Congress. States vastly reduced the percentage of their budgets going to higher education. And every consumer protection afforded a commercial transaction in the United States was summarily stripped from student loans.
While both parties may share responsibility for how we got here, only one party has shown any willingness to take on the challenge of solving the student loan crisis for current and future generations. But to have the opportunity to do so, they will have to win back power from the Republicans who have obstructed every solution put forward thus far.
Sidebar
A Way Out of the Mess
There is legislation at the federal level that would allow for the refinancing of federal student loans. But, so far, Republicans have stood en masse against it.
In June 2014, Democrats had fifty-six votes in favor of Senator Elizabeth Warren’s Bank on Students Emergency Loan Refinancing Act. Republicans blocked it using the same legislative sixty-vote obstructionism they used in the unprecedented theft of a Supreme Court seat in 2016.
Former Department of Education Secretary and current Republican Senator Lamar Alexander of Tennessee, who heads the Senate committee overseeing education, defended Republicans’ inaction on loan refinancing: “This is not a serious proposal. It’s not going to help people. College graduates don’t need a dollar-a-day tax subsidy to pay off their loan. They need a job.”
Alexander displayed the same tone-deaf inanity offered by many older bootstraps Republicans who basically went to whatever college they wanted to for a tiny fraction of the cost of higher education today.
And on the charge of it being a “tax subsidy,” this statement is so false it’s surprising it didn’t come from Donald Trump. Student loan refinancing has no net budget cost. Borrowers are still paying back their loans with interest—just at a lower rate.
In 2013, the federal government made $51 billion off of student loan interest payments. The previous fiscal year, ExxonMobil made a paltry net income of $32.6 billion.
While Republican-controlled government in Washington, D.C., refuses to act, state-based refinancing solutions also need to be considered. People can and should ask their state representatives to consider legislation like this.
One way to support such measures is to contact your representatives at the state and federal level. Tell them to cut those groaning under the burden of student debt a break.
—Scot Ross