Tackling the Crisis In Student Debt

President Obama is set to sign an executive order this afternoon to allow up to 5 million people with student loans to cap their loan payments at 10 percent of their income. This isn’t a new idea, or even a new program, it simply extends the option of an income cap to borrowers who took out loans prior to October 2007 or who stopped borrowing by October 2011 when new regulations took effect. While this is a worthwhile effort, it will not make a significant impact on the nationwide crisis in student debt, as the vast majority of borrowers already have this option. (Though it has done little to ease the crisis.)

It should also be noted that lower monthly payments go hand-in-hand with greater compounded interest long-term, actually making it even less likely that these borrowers will anytime soon be joining the ranks of U.S. homeowners or entrepreneurs. That is why the President will also be endorsing legislation by Sen. Elizabeth Warren that would allow the refinancing of student loans at lower interest rates. Which is nice; but which, just like the disastrously ineffective  HARP home mortgage program, would do nothing to lower principal. At best, these are baby steps, not a true solution.

For the better part of the past year, there has been a flood of news stories, editorials, and think tank pieces looking at whether a college degree is “worth it”. The bulk of these pieces arrive at pretty much the same conclusion: while those with college degrees do earn more over a lifetime than those without, the ever-rising cost of that degree makes the math more murky.

There are so many things wrong with this line of thought, it drives me batty. It should be obvious, for one thing, that those who are able to go to (and especially complete) college usually have a few things working in their favor from the outset that others are wanting. Looking at the degree as a marker of economic mobility is far too simplistic. Comparing the average income of those with degrees against those without is like comparing apples and oranges. There are far more factors at play than simply that degree.

Sure, it’s usually economists or financial journalists who put these pieces out, but to espouse the idea that we can determine the value of college, or any education, based solely on wages is highly insulting to anyone who actually enjoys learning, or even just using her brain. I suppose it’s just part and parcel of a culture where we’ve come to look at schools as factories to produce workers, and little more. But there is intrinsic value in learning for learning’s sake. Our society is enriched when our people are encouraged to think deeply and creatively, and to explore diverse fields of interest.

(There is a reason, after all, that despite an ever-increasing focus on narrowly defined majors and streamlined programs with fewer liberal arts courses, employers continue to value and look for the skills that come with a liberal arts education, and why liberal arts majors ultimately out-perform those from a wide variety of professional fields. Technology changes, but we’ll always need to be able to communicate and problem-solve.)

From a policy perspective, it’s disturbing to see the confluence of so many pieces evaluating the “worth” of college with so many on the crushing burden of debt that graduates (or even those who never graduate) are under these days. The implication seems to be that college isn’t for everyone, and that if you’re not in a financial position to get that degree without incurring debt, you should perhaps look down other paths. In short: maybe college is really only for the rich.

Very few people would suggest that’s a reasonable conclusion; but the way we’re going it seems almost inevitable. College tuition has increased by more than 500% since 1985, coinciding with the growing sense that a degree is an absolute necessity in a 21st century economy. If that sounds suspiciously similar to corporations taking advantage of the hapless masses, that may be because U.S. higher education has become thoroughly corporatized in recent years.

It should be patently obvious that making timid tweaks to interest rates and monthly payments while ignoring the root causes of the crisis won’t actually solve anything. Those who are already deeply in debt need a program that tackles principal reduction at a minimum, loan forgiveness optimally. We need to halt the corporatization of universities, reign in the cost of higher education, and put substantial public dollars into the system.

Finally, a free public education is a tenet of American culture. This has always ended with secondary education. But as we now see higher education as crucial to the economic health, stability, and future of our nation, shouldn’t it follow that we invest in making public higher education free to all?

By: Sandi Behrns

Sandi Behrns is a noted policy nerd, new media & web developer, and consultant to progressive organizations and campaigns. She is a senior contributor to Liberaland, and the Executive Editor of Progressive Congress News.