Why Are We Mad About Cancelling Student Debt?
By: Eunice Brownlee
Tags: Fiscal Policy, Equity, Higher Education, Privilege, Student Loans

Why Are We Mad About Cancelling Student Debt?

Bailing out corporations is the most socially accepted form of government assistance, but when the government wants to bail out average Americans, everyone goes berserk.

Photo by Alexander Schimmeck on Unsplash

I’ve been thinking a lot about student debt cancellation lately. Partly because I have a large student loan that I would be happy to be rid of. Mostly, I’ve been listening to the conversations from those who don’t support it. They have one of two arguments: 1) It’s not fair to everyone who paid theirs off already, or 2) It’s a reward for not being responsible enough to accept a loan that you can’t pay off.

It’s never about people who’ve carried the debt around like an anchor, unable to move out of an overpriced rental and buy a home. It’s never about someone who took out the loan with the best of intentions, but life happened. It’s never about “hey it’s about time the government did something to help out average Americans!”

Even if we look past whether or not those who have opted to take out student loans to fund their education were responsible for continuing their education or irresponsible for not being able to pay for it because they didn’t get that six figure income job that was part of the promise, the idea of relief should not be measured in fairness. To do so is a really privileged perspective.

Sometimes, you don’t get the better deal

This morning, one of the authors I follow sent me an email as part of her 7 Days of Generosity promotion. Each day for 7 days, she’s offering something new, either a large discount or “pay what you can” on one of her products. Today’s offer: a FREE copy of her book.

Well, I already have her book. I paid full price for it when I preordered it three years ago.

Does this mean that I should be mad at all of the people who open that email and opt to take advantage of such a generous offer? Is it fair to me, who paid full price, not even the discounted price that her book is currently selling at, that she should make such an offer to get her words into the hands of others? Not at all.

I know this is just a $20 book, but I’m sure this has happened to you as well. You make plans to buy something and no sooner than you buy it, you find it on sale or elsewhere for a much lower price than you paid. Do you storm into the retailer, demanding that they give your money back (People of Wal-Mart, I know the answer to this is yes; you’re not my target audience at the moment)? Maybe, but are you mad at all of the people who got the better deal? Probably not.

Decision making happens with the information you have at the time

When I went back to school in 2003, I went in and talked with the “enrollment counselor” (read: salesperson) at a for-profit institution. I could wrap up my degree in about two years at $500 per class, plus the cost of books, with each class lasting five weeks. I did the math and discovered that I could afford to put an end to my mother nagging at me for not finishing college.

I was married at the time and we were making a pretty decent income for two twenty-somethings with no kids. A payment of roughly $400/month seemed like no stretch to our budget. After all, I was spending half that on my hair each month, he was spending close to the same on baseball cards, and our entertainment budget exceeded the tuition bill easily. We could comfortably make some cutbacks to make it work.

When the sales guy asked me how I planned to finance my education, I figured that “I’ll be paying cash as I go” was the best answer a for-profit institution could receive. Instead, he responded with, “I have a better idea for you. Student loan rates are the lowest interest rate of any loan you can get. Right now, they are about 3%. So instead of paying cash, take out a loan and you can invest the cash into a high interest CD. I think they are about 12% right now. When you’re done with school, you can pull the money out, pay off your student loan in full and you’ll have money left over because of the interest you’ll have made!”

This sounded like a genius plan to my 24 year old brain. Obviously I hadn’t taken my economics class yet. I applied for a loan and got it. Did I open a CD though? No. Within a year, interest rates tanked and earning 12% on any investment was unheard of anyway.

Six months later, my marriage fell apart and I needed the loan to continue with school. Then I got pregnant, and despite now being a single mom to an infant, I was determined to finish my degree, which I did thanks to an angel friend who babysat once a week so I could go to class after work. Then some of the credits I’d earned ten years earlier had “expired” (seriously, how does knowledge expire?) and I had to retake some of my lower level classes. The price of classes increased during that time as well, and even with some of the grant money I qualified for, my bill just kept growing.

The salesperson at the university was in a position of trust, and I believed what he told me, because why would I think that he didn’t know more about his industry than I did? Why would I doubt that he had the best financial solutions to make education accessible to anyone who wanted one? I really thought that his advice was for my benefit. It was practices like this that caused so many for-profits to fold (unfortunately, not mine) in the past decade.

I got a job making $38,000 a year and I was barely making ends meet. I was told that I would get a raise when I completed my degree (I didn’t). I qualified for a forbearance for a short time, but when it ended, I still could not afford the monthly payment. I defaulted on my loans and ended up locked into a $700/month payment, that I could not miss even once, to get out of it and avoid having my wages garnished. After that, I refinanced and consolidated, but the monthly payment was still nearly $600. And I was still a single mother with a career path, making an annual salary just over the poverty line.

I went back to school under the best of circumstances and I pursued the degree I thought would bring me opportunities to pay off the debt I had incurred. Life happened, and I still have a $52,000 weight attached to my ankle. It is the only debt I carry, and yet it seems to be the one that I still can’t seem to shed no matter what I do “right” or “wrong”.

Student loan debt is not the same; we have to stop acting like it is

Unlike other debt, student loans do not buy you a liquid asset that you can have appraised and sell off when you hit a point that you can no longer afford it. Since earning my degree, I have vacillated between times where I could comfortably pay my loan payments to not being able to afford them at all. I’ve had jobs that I was successful in and I’ve run two businesses. I’ve never made a six-figure income — all of my ability to pay was dependent on some creative budgeting or making decisions like not owning a car.

My ex-husband had crazy student loans too, and at one point, he consolidated them and saved us about $100 a month. What he didn’t know was that when the consolidation is done, if you take out more loans, you’re no longer eligible to consolidate again. And you can’t refinance your loans the way you do a mortgage.

In addition, my loans are a blend of federal subsidized and unsubsidized and private loans. No matter how relief policies are written or interest rates shift around these sums of money, they don’t all get treated equally.

Student loan debt just isn’t the same thing as someone going into foreclosure on a house or having their car repo’ed. There is no asset to offset the cost of the default, and there is no settling for a reduced amount to forgive the balance. You get a low interest rate on a sum of money that is static until it is paid off.

To support or not to support, that is the question

I understand if you don’t support the cancellation of student loan debt because of the ultimate cost to taxpayers. It’s a bailout, yes. But it’s a bailout of your neighbors, your friends, your kids, or maybe even yourself. Those reasons for not wanting this policy make sense to me from an intellectual standpoint.

It’s the whining about fairness that I simply cannot buy into. If there is anything that we know about our country, it’s that nothing is fair. We don’t all have the same access to opportunity, and we don’t all benefit the same way from the same opportunity. So to paint this policy position as unfair is pretty laughable to me.

This is one of the first times I can think of when the federal government is looking to make a move that helps everyday people, not billionaires or corporations. I just cannot see that as a bad thing.