What To Do About Student Debt-- There's A Progressive Approach & A Conservative Approach

Bernie & Pramila vs The Economic Royalists

Oh, look, after consistently sabotaging Democrats’ efforts to solve the problem, Senate Republicans are introducing a plan they claim will tackle the root causes of student loan debt (like students taking out loans for more than they can afford). The plan consists of 5 bills tied in a package called the “Lowering Education Costs and Debt Act,” sponsored by 5 senators not exactly known for championing the interests of working families— Bill Cassidy (R-LA), Chuck Grassley (R-IA), John Cornyn (R-TX), Tommy Tuberville (R-Joke) and Tim Scott (R-SC).

Their idea of dealing with “the root causes” is for example, the “College Transparency Act” and the “Understanding the True Cost of College Act” which mandate that colleges warn students about how expensive they are and what kinds of outcomes students can expect. The “Informed Student Borrower Act” requires students to be more informed when applying for a loan by acknowledging they received student loan entrance materials or they participated in entrance counseling. Students will mostly be rolling their eyes at these and the equally asinine “Steamlining Accountability and Value in Education for Students Act” and Tuberville’s “Graduate Opportunity and Affordable Loans Act.”

I spoke with Pramila Jayapal about this yesterday because she and Bernie had just introduced legislation to eliminate tuition and fees for most families at four-year colleges while making community college free— so actually addressing the root cause of the student debt crisis at a time when more than 45 million borrowers hold $1.75 trillion in total federal student loan debt. When I asked her to compare the approach she and Bernie were taking with how Tuberville and his idiot colleagues are proposing, she noted that “The fundamental issue is that it costs way too much today to get a higher education in this country. Most industrialized countries recognize that higher education— trade or vocational schools, 2 year community college or 4 year college— is an investment in the people who will be the economic engine of the future. Investing in opportunity for everyone to get the skills they need to get the jobs they want also drives our economic growth. That’s why most of those countries provide higher education at a minimal cost. In America, not only has the federal government disinvested in our higher education system, we even try to profit off of people’s loans!That’s absurd. What we need to do is make public higher education free so that we level the playing field for everyone and make it possible for the next generation to do better than the previous ones. We need to invest in our people and College for All does just that.”

In a statement, Bernie explained that “Today, this country tells young people to get the best education they can, and then saddles them for decades with crushing student loan debt. To my mind, that does not make any sense whatsoever. In the wealthiest country in the history of the world, a higher education should be a right for all, not a privilege for the few. It is absolutely unacceptable that hundreds of thousands of bright young Americans do not get a higher education each year, not because they are unqualified, but because their family does not have enough money. In the 21st century, a free public education system that goes from kindergarten through high school is no longer good enough. The time is long overdue to make public colleges and universities tuition-free and debt-free for working families. Education is one of the keys to a successful democracy and we must make it easier, not harder, for young people to obtain the degrees they have worked so hard for.”

This is from the statement that Pramila’s office put out about the bill yesterday:

In the last 30 years, the cost of tuition at public four-year colleges increased 258 percent and at private institutions, it has increased 196 percent. This exponential growth in cost has meant that more than half of students graduate with debt, an average of $28,950 owed per borrower.

The College for All Act will ensure that America never returns to a debt crisis like the one happening right now, where before the COVID-19 pandemic when 24 million borrowers were put in a state of forbearance, more than 1.4 million people were more than 30 days late on their payments.

Aligned with the Plan for Education Beyond High School that President Biden championed, the legislation guarantees tuition-free community college for all students and ensures that students from single households earning under $125,000 a year and married households earning under $250,000 a year are able to attend public colleges and universities tuition-free and debt-free. It would also guarantee that students in families who earn less those same amounts can attend non-profit Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and other Minority-Serving Institutions (MSIs) tuition-free and debt-free. Additionally, the bill makes an annual $10 billion federal investment to cover student support programs in under-funded institutions.

The College for All Act also doubles the maximum Pell Grant to $14,790, makes funding for the program mandatory, and expands grant eligibility to Dreamers, and recipients of Deferred Enforced Departure (DED) or Temporary Protective Status (TPS). Additionally, the legislation triples federal TRIO and doubles GEAR UP funding to serve millions of additional low-income students, students with disabilities, and first-generation college students in their pursuit of higher education.

The federal government’s share of the cost of eliminating tuition and fees at public institutions is set at 80 percent with states and territories paying the remainder. However, the legislation includes an automatic stabilizer to increase that share in the case of high unemployment. States and territories would be required under a Maintenance of Effort to continue their investments in keeping college costs low. The College for All Act is paid for by a separate bill enacting a Wall Street speculation tax of 0.5 percent on stock trades, a 0.1 percent fee on bonds, and a 0.005 percent fee on derivatives. The tax would raise up to $2.4 trillion over the next decade.

One of the original co-sponsors, New Jersey progressive Bonnie Watson Coleman told me yesterday that "As the world changes, higher education is becoming more important for our country to compete. Sadly, many talented young people aren't able to reach their full potential due to the prohibitive cost of college. Many other industrialized nations recognize this and are investing in future generations. Expanding access to higher education has the potential to unlock untold benefits both for personal growth for those who attend and to our country as a whole. No one should be kept from their highest possible achievement due to cost.”

Barbara Lee, also an original co-sponsor and currently a candidate for the open California Senate seat, told me that "Skyrocketing tuition and fees are saddling students with debt that prevents them from starting families, saving for a home, creating their own businesses– you name it. These impacts disproportionately impact low-income communities, students of color, and rural students. I strongly support Rep. Jayapal and Sen. Sanders efforts to ensure that public colleges and universities are accessible to people of all backgrounds. Like so many other things, education should be a right, not a privilege, for all in our country."

Other original co-sponsors include AOC, Ted Lieu, Ilhan Omar, Greg Casar, Delia Ramirez, Mark Takano, Nanette Barragán, Rashida Tlaib, Cori Bush and Jamaal Bowman.

Aaron Regunberg, the progressive Democrat running in the special election this year to replace David Cicilline in Rhode Island said he would have been a cosponsor as well. “We need to make higher education accessible to every young person in this country, without weighing them down with unsustainable student debt. This bill is both a moral and and economic necessity, and I would support it with everything I've got.” (If you’d like to help make sure he gets into Congress— rather than some conservative corporate Dem— please contribute to his campaign here.)

In an essay the other day, “It’s The Inequality, Stupid,” the Patriotic Millionaires explained that exploding inequality since the systemic damage caused by the Reagan administration has resulted in 735 billionaires in the US while “nearly 60% of Americans live paycheck to paycheck, 1/3 of workers make less than $15 an hour, and roughly 38 million Americans live below the poverty line. It’s no coincidence that as the rich have gotten richer, more and more Americans have struggled to make ends meet. All available evidence shows that poverty and inequality are intricately linked. A recent report found that the US— a country with one of the highest levels of inequality among developed countries— has more intergenerational poverty than several peer countries. Further, high inequality hurts social mobility and GDP growth, two key mechanisms by which people are able to escape poverty. There is a clear, undeniable relationship between the number of people living in poverty and the size of the gap between the rich and the poor, and policymakers would be foolish not to see it.”

Patriotic Millionaires doesn’t advocate raising taxes on the rich to raise revenue to pay for things the government wants to do. They advocate raising taxes on the rich to reduce inequality, which in itself isn’t just bad for the poor but bad for the economy and bad for our democracy.