Student loans are stifling our futures, our families and our economy.
It is near impossible to deny that this thought hasn’t run through the minds of most millenials when it comes time to make the important decision on attending college. While we scroll through these long-running, light-hearted memes around student debt on our Instagram feeds, most of us greet them with an anxious laugh because they are all too relatable.
Our politicians should be extremely concerned that not being able to pay back student loans is a legitimate deterrence for our future workforce from gaining a higher education.
Policy around student loan debt has hit the media hard recently, with Senator Bernie Sanders (I-VT) outlining his plan for Student Loan Forgiveness. If enacted, this would mean forgiving all of the roughly $1.6 trillion in student loan debt that is currently owed by approximately 45 million Americans. The plan would be funded by taxing big Wall Street transactions and would ultimately spur economic growth by loosening the burden millions of American families face. Between healthcare, childcare, student loans and cost of living, many families are living pay-check to pay-check, even with median income jobs.
The proposed policy is currently backed in the House in the form of a companion bill by a slate of progressive representatives including Ilhan Omar (D-Minn.) and Alexandria Ocasio-Cortez (D-NY). AOC has publicly endorsed the plan because she is no stranger to the burden of student loan debt, stating that, “it was literally easier for me to become the youngest women in American history elected to Congress than it is to pay off my student loan debt.”
Echoing this proposed legislation, tuition-free public universities and colleges has been a hot topic among the 2020 Democratic presidential candidates. Sen. Elizabeth Warren (D-Mass) has said, “degrees push us forwards, but debt holds us back”. And she couldn’t be more right.
Why should we care about eliminating student loan debt?
We know that student loan debt deters many Americans from becoming homeowners. Just this year, the Federal Reserve has estimated that student loan debt prevented 400,000 families from purchasing homes. And this is hindering economic growth in the country.
But student loan debt is also inhibiting entrepreneurship and the growth of small business in America. In this digital age of innovation, America will soon fall behind the rest of the world if we do not allow our workforce to be agile and take risks.
Enabling innovation will contribute to economic growth, and implementing tuition-free university will ultimately contribute more to the economy than it will cost. College graduates generate more tax revenues as compared to the general population.
Degrees truly push us forward, not just as individuals but as a society.
Equitable access to earning a degree should be reflective of this, but instead, it has become much more unattainable in the long-run. Just take a look at the generation before that was able to attend university, begin their careers debt-free AND land well-paying jobs. What a concept, am I right, Millennials?
This, in part, comes down to subsidies. From the late 1930s to the early 1990s, state universities and community colleges in the U.S. were subsidized at 85%. This previous generation experienced not only a highly subsidized education, but also had access to childcare and housing for those at lower income levels.
However, funding, and in turn, subsidies, for public universities and community colleges has been drastically cut over the last 25 years. Today, in fact, state colleges and universities are funded at a mere 15% –burdening students with 70% more of the costs than the previous generations.
These decreased subsidies coupled with the current ‘third-party payer’ system, significantly raises the cost of tuition for today’s students, while funding for state and community colleges will become increasingly out of reach, limiting access to higher education for the most marginalized in our society.
In the early 1800s, land grant and state colleges founded by President Lincoln, and federal funding granted, on the premise that EVERYONE has the right to seek a post-secondary education for the betterment of society as a whole.
In a way, student loan forgiveness is a gesture toward restoring the subsidies that the current generation is, unfairly, unable to take advantage of.
This has all led to the comparison of student loan debt to an economic bubble, similar to, say, the housing bubble. The student loan bubble is growing and as we all know, bubbles eventually burst.
According to estimates from the Federal Reserve, every minute, $157,000 of student loan debt gets repaid, meanwhile, in that same minute, $191,000 new debt gets borrowed.
It seems like it is only a matter of time until this student loan bubble bursts, but what form this particular burst will take could be quite unpredictable. Will universities become so expensive for the majority of Americans that only the most wealthy and privileged will attend? Will the government be unable to collect on loans on mass scale? Or, perhaps more likely, the current Congress could cap the amount of loans guaranteed by the government. This would ultimately decrease university enrollment to the point of putting some institutions out of business. Not to mention, it would exacerbate already-existing inequality in the United States.
Regardless of how or when the student loan bubble bursts, there is no way to get relief for current student loan borrowers. Unlike other investments like housing, or retirement, student loans do not carry any equitable value. If the bubble were to burst right now, there is no existing scenario where borrowers can sell their college degrees – even with a loss. Student loan debt will continue to follow them.
Rather than waiting for this bubble to burst, Sen. Sanders is providing relief for borrowers while we still can.
Bernie’s plan ensures that degrees truly push us forward – not just as individuals but as a society.
Americans with student loan debts are overwhelmingly unable to pursue this notion of following their dreams. They become far less picky when it comes to choosing jobs, accepting roles that do not offer their desired career progression. Not only can this place a lifetime of financial limits and burdens on them, it will consequently impact happiness and mental health.
In this light, it is in the best interest of the American population to have happy, hard-working, and driven citizens with an adequate work-life balance who can not only pursue, but also achieve their dreams.
In order to walk the commencement stage with a degree in hand, students should not also be forced drag with them a looming and mounting pile of debt. This is why here at Brand New Congress, we fully support tuition free public universities and colleges. And so do our candidates.