It’s easy to forget in this political season, particularly with the entry of Bernie Sanders in the presidential race, that there was a time when student debt was simply not an issue in presidential politics. What happened? It probably had a lot to do with Occupy Wall Street, the 2011 protest against social and economic inequality. Occupy didn’t go very far in terms of significant political or economic reform, but it very much made student debt a serious topic for political discussion.
According to an NBC News piece produced in the midst of the Occupy protests
At a gathering last week in a public atrium a few blocks from the square that is home to the Occupy Wall Street encampment, New York University professor Andrew Ross led a discussion about the burden of student loan debt — now estimated to be between $550 billion and $829 billion — and proposed a radical solution: “A Pledge of Refusal.” The idea is that protesters would sign a pledge to stop making payments on their student loans as soon as 1 million had joined in making the pledge.
Ross told the crowd of about 50 people — ranging from current students to long-ago graduates — that while individuals are subject to heavy financial penalties if they stop paying on their student loans, a mass action by 1 million would make the banks take notice
Ross characterized the debt burden as “immoral.”
We’ve always had student debt in American in some form or another, but it’s only recently that five-figure debt loads that take like 25 years to pay off have become standard. The Great Recession and Occupy, however, made us realize many of us might not be able to pay those debts off, however.
According to an article by Danielle Douglas-Gabriel in the Washington Post, it’s now become an important issue for many presidential candidates. And that’s because it’s now the major issue for young people:
Democratic pollster Geoff Garin, who worked on Clinton’s 2008 campaign, said he thinks the issue of student debt is as important to millennials as “war and peace issues” were to baby boomers.
“A part of the reason student debt is so important for Democrats is that it’s a crucial motivator to get younger people to vote,” Garin said. “Student debt is often the defining economic fact of their lives.”
People 18 to 34 account for about one-fourth of the voting-age population. While that group largely sat out the midterm elections, their votes proved critical in the last two presidential elections.
Before Occupy policymakers pretty much thought of student debt the way they thought of credit card debt. Yes, it was unfortunate, but the burden was pretty much the borrower’s own fault. Now it seems policymakers are beginning to think that this might be a policy issue.
Sanders recently introduced a bill to make public colleges free through higher taxes on financial transitions and businesses. Former Secretary of State Hillary Clinton has promised a plan for “debt free” college, though the details of this remain obscure.
Democratic proposals are loosely based on a policy paper by the left-leaning think tank Demos, which called for the federal government to give education grants to states that agree to increase spending on higher education and increase need-based grant aid.
Republican candidates have no comparable free college program, though the right-leading American Enterprise Institute has a proposal to try to address the problem by making colleges pay some of their students’ loans if they default. This would give colleges an incentive to keep college costs manageable.
Republicans aren’t that eager to talk about student debt. But Marco Rubio, importantly the youngest candidate in the presidential race so far, has been relatively outspoken about this issue. He supports an “income-sharing” plan, under which students would pledge to return a share of their future earnings to financiers who “invest” in the college educations.
Last year Rubio also introduced a bill to simplify federal student loan repayment. Under the proposal the federal government would automatically enroll students with loans in a plan to deduct 10 percent of their earnings to pay back the loans. Under current policy borrowers can take advantage of a program that allows them to pay no more than 10 percent of their income, but enrollment is not automatic, and is actually rather complicated. Only 10.5 percent of borrowers are using the income-based repayment programs.
Occupy didn’t go very far toward eliminating control of the economy by the super-rich, but at least now we might finally getting around to tackling student debt. It’s about time.