Strike Student Debt

If there was going to be major action to reduce the $1 trillion in student debt—or at least the rate at which it’s increasing—it probably should have happened by now.

The conventional wisdom going into the election was that President Obama and the Democrats would have to galvanize the youth vote if they wanted a repeat of 2008. With nearly 20 percent of families, and 40 percent of young families, owing a slice of the education debt, the issue affects a large and growing constituency. And because existing student loan policy is so anti-student and pro-bank, Democrats could have proposed a number of commonsense, deficit-neutral reforms, even reforms that would have saved the government money. The stars were aligned for a major push.

Remarkably, it didn’t happen. Instead we saw dithering, half-measures, and compromises meant to reassure voters that politicians were aware of their suffering and that something was going to be done. The moves that were implemented did not address the core problem: the amount of money debtors will have to pay. For example, President Obama claimed credit for delaying a doubling of interest rates on federal loans from 3.4 to 6.8 percent, while, at the same time, ending interest grace periods for graduate and undergraduate students. The first measure is temporary and is expected to cost the government $6 billion; the second is permanent and will cost debtors an estimated $20 billion in the next decade alone. Despite his campaign rhetoric, President Obama has overseen an unparalleled growth of student debt, with around a third of the outstanding total accruing under his watch.

Neither major party offered a credible plan to reduce the student-debt burden. While Obama assured voters (“Let me be perfectly clear …”) that he understood the importance of supporting students who wanted to go to college, the Romney campaign spouted free-market platitudes. The real difference between the two sides was ultimately more about who debtors would owe—the Treasury or private lenders—than about how much. Not a single policy proposal on the proper scale was offered, and so the true size of the problem fell out of the national debate. Obama won reelection with a smaller majority than in his first election—the first time that has happened to an incumbent president since 1944—and the Republicans retained control of the House of Representatives.

There’s nothing accidental about a student debt discussion that veers between insubstantial and nonexistent. An intricate web of government and financial interests and the laws that protect them have kept the fixes cosmetic while allowing the outstanding total to grow. Policy failures reveal the conflicts of interest that characterize the day-to-day business of governing and unmask the incentives that reduce “hope” and “change” to advertising copy. The challenge of student debt, like climate change and other urgent needs, threatens to exceed the capacity of our current political and economic systems.

Click here to read the rest of Malcolm Harris’s “Pomp and Exceptional Circumstance: How Students Are Forced to Prop Up the Education Bubble.”