Opinion: What Biden and Almost Everyone Else Gets Wrong With Student Debt 2022-04-29 15:21:01


Biden’s slow motion on student loans and his skepticism of more generous relief could easily be written off as commensurate with generations: Under Biden, away Fewer Americans are enrolled in college And when they did, It was more affordable. Not only that, but when Biden was a college student in the early 1960s, it was still possible to get a middle-class job without a college degree. (My parents, of their own generation, from poor and working-class backgrounds moved into the middle class in the 1970s without a college education.)
But Biden’s hesitation says less about his age and more about his analysis of the problem. The president seems eager to divide the nation Huge student debt burden – $1.6 trillion owed to the federal government by 45 million Americans – to maturing and non-accrual debtors.
Households bear more than half of the debt burden Income over $74,000 One of the reasons why Biden prefers the debt forgiveness test. But debt holders are also disproportionately Women and people of colorBlack debtors have the highest levels of student debt. And even high-income families find themselves servicing huge debts at rates that only eliminate the principal, leaving many people paying off the debt. Much more than they originally borrowed.

That muddy picture of who “deserves” a rest suggests that the Biden administration, observers, and other participants in this debate are asking the wrong question. It’s not about World Health Organization Holds student debt, but Why. The answer to this question points to a broader economic crisis in the United States, one that needs a more comprehensive approach than partial relief.

Elizabeth Warren: I can go to college on a waitress & # 39;  Salary.  Americans can't do that anymore
Since the 1980s, the US economy has been characterized by greater inequality And More debt. The two go hand in hand. The American dream of middle-class jobs and home ownership is becoming more and more out of reach for more and more people: housing prices have skyrocketed and a college education – a growing requirement to enter the middle class – is becoming increasingly expensive. after both Appears It can be achieved thanks to Huge amounts of debt easily accessible.

With the rise of subprime mortgages and plentiful student loans in the early 2000s, Americans can tell themselves that the inequality and uncertainty that have come to define life in the United States is untouched. They can still afford a home, they can still afford to send their kids to college, and they can still engage in the fantasy of class mobility and economic stability. But that debt turned out to be extraordinarily expensive, and paying it down had a crippling effect on people’s ability to make ends meet — so even families with incomes over $74,000 find themselves struggling to pay off large monthly student debt.

The pandemic has driven home exactly the amount of uncertainty that student debt has caused: Families who have been suddenly forgiven have found that their budgets suddenly have room to breathe, even in the face of the uncertainty of the pandemic. (savings slept fast During the pandemic, partly because of stimulus and tax breaks for children, and partly because of a student loan repayment pause.)
However, soon these payments will resume in some form, and families will find themselves under the burden of debt. This comes with the rise in housing prices, Guaranteed back by high-risk mortgages.

It’s easy for some people to write off all this because Americans live beyond their means, and debt forgiveness is an unearned bailout for financial recklessness. But this perspective misses that these are also Americans who play by the rules: told to work hard and go to college for a well-paying job, and told to buy a house instead of rent because it builds intergenerational equity and wealth. Yet these rules are a path to prosperity for fewer and fewer Americans, a fact that has been overlooked by all that easy and expensive debt.

Debt, not taxes on rich and generous government services, is how the United States has chosen to deal with inequality. As a result, we have an increasingly unstable society, in which one failure, one mishap, one loss of a single payment can bring about a person’s entire financial future. Much activity over the past three decades has sought to mitigate this danger: Elizabeth Warren The fight for bankruptcy reformsto save families going through hard times; advocating a bailout for homeowners rather than banks during the 2008 financial crisis; The debt collection That arose from Occupy Wall Street, transferring student debt forgiveness to mainstream democratic politics.
However, these efforts are repeatedly countered by claims that those who need relief are ultimately undeserving. For example, Rick Santelli, speaking from the ground of the Chicago Mercantile Exchange in February 2009, against the homeowner’s bailout, arguing that it was not the bankers and financiers at fault for toxic mortgages, but the people who bought homes. It’s not the lenders and universities that are responsible for charging teens with six-figure debt, but students who failed to get a high paying job to service all that debt right away.

As long as we insist that solving the American debt crisis requires assessing the worthiness of individual borrowers, we will remain trapped in a system of inequality and inequality. If the Biden administration wants to enact real reform, it will not only provide as much generous loan forgiveness as possible, but it will begin the long and difficult project of tackling the inequality that makes debt so expensive the engine of the American economy.