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Should we? The cost of higher education in America has skyrocketed in recent decades, and so have the student loans to pay for it. Americans are carrying more than $1.7 trillion in college debt. That's more than we owe credit card companies or auto lenders.
Nearly 43 million of us are still paying off our college tuition. It's a crisis with massive consequences for our economy and for millions of Americans who made, quote, the right decision to get an education. President Biden campaigned on forgiving $10,000 of debt for everyone. Democrats have been pushing for more.
Clearly some relief is on the table, but what's the most fair way to do it? I'm Jane Kosten, and this is one of those debates I have to be skeptical of my own opinion on. As someone with sizable student loan debt that I have no idea when I'll finish paying off, my first reaction is, yes, please, kiss on my debt. I will happily invest that money elsewhere in our economy.
But especially when a position benefits me, I know to be extra critical. So I brought together two people who feel very strongly that the crisis is real and needs fixing, but that's about where their agreement stops. Astra Taylor co-founded an organization called the Debt Collective, which pushes for total cancellation of debts for all. Sandy Baum is a non-resident senior fellow for the Center on Education Data and Policy at the Urban Institute.
She thinks universal debt cancellation isn't progressive at all. In fact, it's regressive. Needless to say, they deliver on our show's title. I'm still sweating.
Let's start with a personal question. Do either of you have student loans or student loan debt? Sandy, you first. I went to college many, many years ago.
My kids had some student loan debt. They have paid it off, so no. And Astra, I actually don't have any student loan debt, but about 10 years ago I did, so right after the Great Recession, I owed $42,000 and I defaulted. Oh.
So I experienced that punitive measure because overnight my balance went up 19% and my credit was even worse. And then I had a change of fortune. Turned out my partner as a popular musician. He went back on the road and he paid off my student debt.
So I've experienced both the trauma of default and the benefit of suddenly having that disappear. That is the most romantic thing I have ever heard. It was pretty sweet, right? That's beautiful.
So as Senator Elizabeth Warren and other people have made clear, this was not always the norm. How did we get here? Well, the first thing is that when you're trying to judge the magnitude of student debt and where there are problems, it's really more helpful to look at the amount that individual students owe than it is to look at the aggregate amount of debt. Obviously college used to be much cheaper.
The tuition prices have gone up very rapidly and that's part of the story. And we can talk about why that has happened. Another big part of the story is many more people go to college now. When I went to college, it was very rare that people whose parents couldn't pay went to college.
You didn't have older adults going back to college so much. And if you couldn't afford it, you just didn't go. But now we have a situation where we implement lots of financial aid programs because we think that you should be able to go to college even if you can't afford it. You know, you should get grant aid, but borrowing to pay for college is reasonable in the sense that it's an investment and you can pay out of the return to your investment and for most students that works.
But it doesn't work for everybody because for some people it just doesn't pay off. It may be that they don't finish a degree. It may be that they went to a school that cheated them. It may be that they graduated in a really bad time.
There are lots of reasons why it doesn't pay off for everyone. And we need to protect those people. But one reason that we have much more student debt is because many of the people going to college now wouldn't have the money to pay, even if it were for each tuition, they wouldn't have the money to live while they're in college. So it's a combination of getting more expensive and partly because states and localities are not paying as much of their share as they used to.
And part of it is who's going to college now. So I would tell the story slightly differently. There is a long tradition of education as a publicly funded good in the society. It goes right back to the foundation of our land grant colleges and universities with the more lack.
I mean, look at something like the GI Bill that sent a lot of veterans to college for free. Look at the famous California Master Plan which created a beautiful three-tiered system of education for the people of California. So actually what's happened is we just took a wrong turn by using loans to finance education. There has been, as Sandy just said, a divestment, state investment in education and higher education has diminished.
Intuition has felt that gap. And what we've done is we've created this very complicated and I think very destructive system of lending to feel that gap. I went to the University of Michigan, which in some ways viewed itself as being recession-proof. And you hear this in a lot of college towns that because the university operates as this giant employment center that is very much encouraged by the government and elsewhere.
But you saw that while the state could not afford to fund University of Michigan, Michigan, Michigan, State University, Eastern Michigan, Western Michigan, Northern Michigan, there are many directional universities in Michigan. That tuition and even more so the fact that tuition isn't in some ways backed up by federal loans, the University of Michigan is able to keep on ticking, so to speak. But this was a political choice. If you look at California and I think it's important to begin there, you have then Governor of California Ronald Reagan as a political project wanting to impose tuition.
He was raising the fees of this state university precisely because there's something deeper going on which is an attack on the idea that people are entitled to an education and an imposition of debt as part of a right-wing education. And that is part of a right-wing economic project. And that is now the mainstream. Now we say, okay, this is just how you do things, student loans have to exist instead of contextualizing it.
So I think in some ways we can say, oh, wow, the idea of canceling student debt is this radical demand. We can also say no, it's a return to this egalitarian tradition of providing education for everyone on equitable terms because it's good for society as a whole. So there's a way in which we're saying that some still out of the box now is a restoration of these foundational principles. So I would argue that we never had an equitable system as you describe them.
In California, there were studies that California was a poster child for a regressive financing system. It wasn't that everybody went to college and it wasn't that everybody went to the same college. I mean, the demographics of who goes to the University of California versus who goes to the California Community College system are very different. So the state, even though tuition is gone way up, the state spends much more per student on those who go to the University of California.
If you can get into Berkeley and you're going to stay there for four or five years, you're getting a huge subsidy. Do you end up with the Community College? You're getting a small subsidy. And who ends up at the Community College?
Those people from less affluent households. So really one of the things that makes people think that it's equitable for people to pay some tuition is the distribution of those benefits that we don't think that other people from which backgrounds who are going to end up being the rich people in the end deserve to have huge subsidies when we really need to help people in early childhood education. We need to fund Community College. We need to fund their K-12 and their neighborhoods and their health care.
So they'll have a better opportunity to go to Berkeley themselves. Right. But the spread between Berkeley then and a junior college, a merit college or whatever it was then is less probably than the spread between Harvard or Yale and for profit colleges, which is what we have at a national level, right? Which is the system that's evolved.
So I totally agree. The University of California system in the 60s and 70s wasn't sort of the ideal we should reach towards. But I think we should build on that model in that principle of public education for everyone and perfect that instead of going further down the track we're currently on. Astro, a lot of your activism around this subject was sparked by the 2011 Occupy Wall Street demonstrations.
Can you tell me a little bit about the history of the activism centered around student loan debt and why do you think this has been such a focal point? What are the things we aren't doing because we are thinking about our student loans? Yes, it's 2021. Occupy Wall Street was 2011.
So 10 years I've been in this movement. And what drew me to it was a kind of insight that something in our economy has changed. We are increasingly indebted and people are indebted for the necessities of life. So we have to debt finance our education.
We have to put our medical bills on our credit cards because we don't have universal healthcare. And the problem is wages have stagnated, right? That's actually the bigger context for this conversation about student debt. So wages have stagnated, people are borrowing and there's kind of an illusion of broadly shared prosperity.
But in reality, households are deeply indebted. Part of what that does is it individualizes, right? It's your student loans for your education. It's your bill at the end of the month to the credit company.
But this isn't tens of millions of people making bad personal choices. This is a structural issue. This is about the way our economy is organized. And so we came together to occupy Wall Street and we said, well, hold on, what if debt is actually instead of being isolated instead of defaulting alone?
Like I did, what if we came together and made demands for a different system, a system that actually worked better for everyone? And so part of that is actually just first about getting over the stigma. People have so much shame and stress about their debt. And I see that in the debt collective.
We have people reaching out in absolutely desperate situations economically, but also psychologically. We have people saying that they think about killing themselves because they are so indebted and they can't give by. It also in a kind of less dramatically than that does influence people's life choices. We see that people make career decisions based on their debt.
There's data showing that people graduating from law school, for example, want to go into public interest careers, but then they realize, hold on, I can't pay off my $200,000 debt working for $50,000 or $60,000 a year at some nonprofit. So I'm going to pursue corporate law. We know from professional associations that there's a crisis where there aren't enough dentists or doctors in rural areas because they have to go and pursue careers in places that are more populated and go into specialties where they can actually pay their, you know, massive student debt. It has a perverse impact on people's life choices.
And Sandy, doesn't that have repercussions for the economy? If people aren't buying houses because they can't pay both a mortgage and their student loans, isn't that much debt bad for the economy and hypothetically a student loan free me would be more likely to be interested in making those major purchases that are the main drivers of our autonomy? You really have to differentiate different kinds of debt. I mean, to me, the fact that people have a medical debt that we don't have a health care system that supplies health care to everyone instead of asking them to, you know, pay for it out of nothing.
That is unconscionable. We shouldn't have that. If the movement were to forgive medical debt, I'd be like, yeah, we should never have medical debt. We should make sure in the future that no one ever has to borrow that the income distribution of people with medical debt is really different from the income distribution of people with college debt.
If you're asking about the impact, first of all, many of the studies about the impact of student debt are significantly flawed. And one problem I think when you ask this question is what's the counterfactual? So if you want to say, look, people who went to college have higher homeownership rates and people who didn't because they have higher incomes and higher wealth than people who didn't. In your situation, personally, if someone had paid for you to go to college and you didn't have to borrow and you have the education you have and the job you have, you would be much better off.
Of course. I would be so happy. Yeah, there are things you're not doing because you have to make a long time. It's not that everyone knows that.
Look, so that's clear. And if you compare the financial situation of people whose parents paid to people whose parents didn't, it's not just that they don't have college loans. Their parents are also giving them a down payment for our house. They're doing all kinds of things for them that other parents don't.
And that's not fair. And that's our society at large. That's not about college. So the choice that people have to make is frequently, should I borrow money and go to college and get an education and help them.
Or should I say, you know what, I'm not going to take out loans. I'm not going to college. People are much better off borrowing money going to college, getting a benefit of a college education, even if they have to pay back their student loans. So it would be terrible for the economy.
So people stopped going to college and I just want to point out that we have income based repayment systems. They're not perfect by any means they need to be strengthened and improved and all of that. But what we need to do is make sure that if you can't afford your payments, you don't have to make them. We have a system that will forgive the data people who can't afford it.
It really needs to be strengthened. But to suggest that nobody should be able to borrow money. I mean, who would have a house if you couldn't borrow money for a mortgage? It would be that you would not need to borrow money to go to college.
Tuition should be cheaper, absolutely. But even if there were no tuition, who's going to pay for you to live while you're in college if your parents can't afford it. And again, the people who go to college for a long time, true extensive colleges are people who are relatively affluent. About half of the student debt that people were taking out is for graduate school.
Is graduate school going to be free? Is Harvard going to be free? I mean, really, I mean, people are going to still borrow money for college because it's a good investment. So there's so much here to unpack.
We have a society where you have to get credentialed to get a job. You have to get a bachelor's degree to get a bachelor's degree to get a high school degree. If you are black, you have to get a bachelor's degree to compete with a white candidate who lacks the same degree. So we have a system that's driving people to credentialize.
Part of that, to me, is that education has been twisted into primarily job training. We think of it as you take out your loans to invest in yourself so you can get a job so you can pay back those loans. I want to just break that paradigm and say, no, education is actually about education. This is why it should be free.
Career training is part of that, right? And cultivating this kind of expertise is part of that. But there's actually something bigger. I think that we need to go back to this idea of funding education as something that is good for a democratic society.
Sandy, I think what I would say that Kensley's student debt is regressive because some high earners would get their debts canceled. I want to dispute that and say student debt itself is regressive. People whose parents are millionaires and billionaires do not have to take out student loans to go to college. They pay the tuition.
So they end up paying less for the same degree than people who have to borrow who have to take out student loans because those borrowers pay over time. They pay over years and decades and they are charged interest. So they often pay many times more over the course of the life of their loan. So the student debt itself is regressive, which is why canceling it is a progressive policy.
And we do have these systems. We have systems like IDR, which is income driven repayment. We have a public service loan forgiveness. To say that they kind of need to be fixed as an understatement.
These programs are completely broken. I work with debtors every day who are tortured by these programs. People have planned their entire adult lives planning to get public service loan forgiveness. And then they didn't get it.
99% of people have been denied the public service loan forgiveness. They plan their lives around. Sure, you can be an income driven repayment and be making technically zero dollar a month payment on your loans. But you've still got this screwed up debt income ratio.
You're still got terrible credit. It's still hanging over you. You know that you actually are worth less than zero. These fixes are complicated.
They're bureaucratic. They're all these unnecessary administrative costs. And it's like, I think the question we need to ask is like, why put so much energy into fixing a broken student loan servicing system instead of just going like, let's go back to something that's obvious, which is so funny education in a different way. If you were to forgive most student debt now, it's absolutely regressive.
It's not regressive because some rich people would get some money. When people talk about the racial welfare, about half of black adults have never been to college. They don't have any student debt. If we wanted to give everybody a $10,000 distribution, that would be a great idea.
I do too. I would do that too. I'm not worried about the fact that we're going to give $10,000 to Bill Gates. That's okay.
Give it to everybody. But do not exclude the people who never went to college. Many people never went to college because they couldn't manage to afford it. For lots of reasons.
They deserve this $10,000 handout as well. Think about the money we're talking about spending on helping people with children. We've got to do something about child poverty. And if we do something about child poverty, it's going to help people get to and through college.
I mean, I think picking on the idea that it's going to help some rich people, that's not the problem. Public service loan forgiveness, no argument. It's a disaster. Of course, we have a huge problem with that.
If you forgave all student debt today, then what about tomorrow? And again, free tuition is not going to eliminate borrowing. People are going to borrow for graduate school, for private colleges, and to live while they're in college. So what about the people who just paid off their loans?
What about the people who are going to borrow tomorrow? You know, there are some people whose debts should be forgiven. So if you borrowed $10,000 and you've been trying to repay for 10 years and haven't made any progress, we should forgive it today. We shouldn't make you wait another 10 years.
If you were the victim of fraud or abuse, we should forgive your debt. If you're a parent living below the poverty line and we gave you a federal loan so you could help your kid go to college, we should never have made that loan to you. We should forgive it. But we should not forgive the trillion and a half dollars of student debt and increase the federal debt that way and put all that money in the pockets of many of the people who have the most earning potential in our society.
I think that misunderstands the true economics of it because we're not in a position where we're choosing between $10,000 to the people versus that cancellation, right? That cancellation is a policy that can happen because of executive action, so the Biden administration can do it. We'll increase that. We'll give $10,000 to some people and not other people.
But the money, the Department of Education, let people out the door. That money is already gone. And as you just said, we have systems that basically bake in debt, cancelation, or forgiveness. We're just punting it to decades in the future.
Why not face the facts that the vast majority of this is not going to be paid off when it is collected? It's an incredibly punitive means, right? We garnish the social security payments and elderly people we seize their tax returns. We should not do that.
We should not. We put people into default as I was put into default and then my principal increased. We have to understand that this money, when it is recouped, is recouped through these pernicious and punishing methods. Why do that?
Why not just say let's cancel this? Even if we canceled some of the numbers on the table of $10,000, $50,000, we would still have a student loan crisis. We're getting into solutions and I like that we went to our last point of solution of total forgiveness first. There are a couple of stops on the road before we get there.
And you just mentioned the most recent proposal from President Biden, which is a $10,000 unilateral cancellation for all federal dollars, which would wipe out the debt for about 15 million Americans, which is not a small number of people. So, Astro, what are your thoughts on $10,000? I feel like we're doing a bit of an auction here, but $10,000. Take it or leave it.
Oh, absolutely. That's part of why there does need to be a group holding down the corner for full cancellation. There has to be people on that flank. $10,000 is nippling around the edges.
I think it shows, though, for me as an organizer in the space, I feel that the fact President Biden ran on that is a testament to the work of debtors standing up for themselves and saying this is a crisis. I do want to flag that he also ran on the promise to cancel student debt for undergraduates who attended public universities and historically black colleges and universities, as long as their income was under $125,000. So that's more substantial. Some of the other proposals that have come from Senators Schumer and Warren, talking about canceling $50,000 in student loans, again, this catalog continues.
What do you think of these positional moves, Sandy? Well, I would rather have them forgive $10,000 if everybody's debt than $50,000 if everybody's debt. And the share of people who owe $50,000 is small. But again, I want them to give $10,000 to everyone.
And it would be a very interesting question. How many people would use the $10,000 to pay off their student loans? First of all, in terms of a stimulus or helping people right now, let's acknowledge that since the beginning of the pandemic, no one has had to pay their federal student loans. All of those payments have been deferred.
You don't have to pay them. No interest is accumulating. And if they forgive your debt, they're not handing you money. It's a stream of you don't have to make future payments.
So in terms of helping the economy right now, it doesn't help anybody right now because nobody's making those payments. When I get the email that tells me that my loan forbearance on my federal loans, because I have private loans, which is a more rare scenario, but, you know, very fun for me. When I get that email telling me I don't need to make those payments, I do think, awesome, that means that when at some point we are allowed to go places, I would have the opportunity to go somewhere or buy a thing. When you think about the budgeting that is done, I have spent the last decade of my life figuring into my budget that here's how much money I make, here's how much money I actually make because of my student loan payments.
But look, if I get that back, I am thinking we could do X thing, we could do Y thing. So I just want to press you a little bit on this because it is not that I am literally being given $10,000. It is that my economic possibilities whiten. You will be a happier person.
Absolutely. I don't regret you that. I love being happy. People who are struggling most now.
Look, think about who's lost their jobs during the pandemic. Think about who's not sitting on Zoom, you know, going to work. I mean, the people who are struggling the most now are not the people, most of them don't have student debt because they didn't go to college, some of them do, but mostly they have lots of other problems. They have other kinds of debt.
They can't pay their electric bills. So if you want to have an agenda, I mean, maybe we can argue about whether we can do everything, everything we want to. I want to invite you into the debt collective where we organize to cancel all these other kinds of debts, Andy, because I'm 100% with you that all of these other debts need to be cancelled, but people, student debters hold these other debts, they hold medical debts, they hold credit cards. If people can't sell all debt, you got to solve their problem in a different way.
If people can't borrow money, people aren't going to pay back their loans, nobody's going to lend their money. And we have loans for a reason because people can distribute payments over time. We need a much more equal society, but not allowing people access to credit is not going to be a solution long term to problems. And everybody needs a home.
Everybody needs a place to live. Why shouldn't we do away with housing debt? Let's forgive all the mortgage debt. Hey, this is Connor Collins from Brooklyn, New York.
The thing I've been arguing about is he and debt forgiveness. And the way that I've been coming at this is more from the social democratic perspective than we believe in a strong welfare state. But at metric, I see student debt forgiveness as more of a bailout to the elite institution than a bailout or a forgiveness to the students who are ripped off by them. Thanks.
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One of the pieces of this is that only about 62% of people graduate from college with a Bachelor's degree they do in six years. About 38% withdraw and millions of those people who withdraw who did not finish college who are the people who are likely with by this pandemic being most impacted. The people who are not lucky enough to be able to do so much of their work at home or for whom working at home does not exist. They still have millions of dollars of student loan debt.
But for the idea of a proposal that says we will forgive about $50,000. But if you make less than $125,000 a year, does that make that more equitable in your eyes, Sandy? It makes it more equitable. But there are a lot of issues.
Like, for example, if you make $125,000 a year, what if I mean, I think people who have been trying to repay for years and haven't succeeded because they have a long term low income. Need to have more debt forgiveness. But if you just graduated from college and you're making less than $125,000 a year, this is a real windfall to you. So let's think about who really can't afford to pay.
I don't want student loans to oppress people. People who drop out of college are the biggest problem. They struggle the most. People who went to for-profit institutions.
We have lots of problems that we have to solve. Whether they're student debt or not, if you go to an institution that promises you, you're going to get a job at the end of it and you can't because they just are total rip off institution. This is outrageous and we need to do something about this whether you borrowed money for it or not. So it's not going to solve those problems to just forgive the debt of people who just left those schools.
We need to solve those problems. They're going to be with us until we address them head on. It's not such a pie in the sky thing to imagine that people aren't financing their education for student loans. This is something that exists in other countries.
In the beginning, when students just began, they were conceived as like a little bonus, right? And Pell Grant typically covered tuition and gave people money to live on. So to address how do people actually survive question. You know, loans are not the only way we can finance education.
I think that that's really important to say. I wanted to say on the for-profit college front, I have organized for the last six years now with students who were different. I'm not a student who were defrauded by predatory for-profit colleges. And this is why I am so adamant about the fact that the attempts to fix and improve the program and create more oversight and have some laws or more information for boards.
They don't work. The systems that the Department of Education are holding are predatory. We've got millions of people trapped in huge debt for worthless degrees. And these for-profits are the logical endpoint of the system of loan finance education and treating education as an investment in a commodity and not a public good.
So I am very familiar with the trials and tribulations of the most vulnerable borrowers. And what those borrowers have helped teach me through my organizing with them is that we need a solution that actually helps everyone. We need to stop trying to divide people, you know, and say, oh, actually, well, let's not talk about this kind of debt or that kind of debt or because when you do that, when you divide everybody up, it makes the problem seem smaller than it is. The fact is that for-profit college students and, you know, doctors who can't pay their debts all owe money to the same system.
They're all connected to the Department of Education. Most of them have federally secured loans. And the same solution will help everybody, which is full debt cancellation and fixing the solution going back to free public higher education. It's not a solution.
It's not to suggest that the problems with people defrauded by their for-profit institutions are the same as the problems of doctors who are right now in residency and owe $200,000 and going to be neurosurgeons is absurd. I mean, they are such different situations. There are timing problems. There are problems of being cheated and there are problems of being given opportunities.
You make it sound as though it could just be a simple solution. It's not simple in the short term or the long term. There are not but there is a problem with doctors who want to be general practitioners. Doctors who want to not have to maximize their returns.
There are first doctors who don't make a lot of money. There are lawyers who don't make a lot of money. But the idea that the average taxpayer should pay for people with their debt. For people with lots of money to go make lots of money instead of using tax revenues to actually create opportunities for people is so much not a progressive idea.
Education has a social benefit. We live in what we call a democracy. And I think 2021 has taught us anything. It's that we want an educated populace.
We want people to be able to learn how to think critically. So public K through 12 education made sense in the industrial age. This is the 21st century. People need more time to learn, more time to explore.
And more time to develop these critical capacities. I want to interrupt there because one of the challenges I have with this conversation is should we be talking about greater access to education, which seems to be your point, or is part of the issue that about six in 10 jobs require some education beyond the high school diploma. The fact that there are so many jobs and I think we've all had them where you were basically required to have graduated from college, even at no point did your college education. Let's just say that my history thesis on Nazi propaganda before and after the battle of Stalingrad didn't really come up that much with a lot of my early jobs.
So is the challenge everyone should have access to this education or obviously there are a lot of jobs required to perform so occupational licensing, but there are a lot of jobs that perhaps shouldn't need people to have college education in the first place. We should worry about both of these things. Of course, everyone should have access to this educational opportunity, but it shouldn't be a requirement for a living wage, right? Education, of course, has social benefits and even the private benefits everyone should have access to, but it has private and social benefits is not a public good like if I go to college, you live in a better more educated society, but I get most of the benefits.
You don't get equal benefits, and you're indifferent to whether it's me or you who goes to college. But the idea that we don't have good opportunities for people who don't go to college with lots of people when they graduate from high school, we hope they graduate from high school, not everyone does. They don't want to go sit in a classroom again, they need an apprenticeship, they need opportunities for good jobs that don't require them to go to college, and we absolutely need to focus on that. But we also need for them to have that choice where it's not financial constraints that make it impossible for them to go to college.
So I think your dichotomy is like you're pointing out two things that we need to do. And if wages were not so unequal, if we didn't live in a society where the people at the top of the distribution earned so much more than the people at the bottom, then you could make a choice based on what satisfies you in life instead of thinking you're going to be poor if you make the wrong choice. We agree on this. Good jobs don't appear because you've minted a lot of diplomas, right?
Like we need to figure out how to create better jobs to create equity in the workforce, this isn't something that is solved by education policy. And I totally agree that you shouldn't need this arbitrary credential to get the job that a generation ago you could get right out of high school. So I think they're complementary problems, they overlap, and we've been on the wrong track by thinking that, oh, we can solve this problem of employment and wages just by pushing people in the door of colleges, whatever the cost is. But I do think that basis that you wrote probably has helped you more than you think it's not just about the subject matter.
It's about how you learn to write and think and create and I'm sure you're using that all the time. Horrifyingly, the subject matter came up a couple of times. I really wish it wouldn't have. Okay, so let's talk going forward because, after you've mentioned the idea of free public college for all, and I want to talk about solutions that are actually possible with the Congress that we currently have.
So, Sandy, I'd like to start with you. If total cancellation isn't effective, if free public college, I'm going to guess it's not what you're thinking. What do you think we can do to reform higher education so more people have access to education, but aren't crushed by debt? And how can we do so in a way that's fair?
So I think that the federal government can play a larger role in funding public higher education by providing money to states that matches state appropriations, so that states will have more incentive to more generously fund public higher education. The states don't just need to lower tuition, they need resources to make these institutions able to serve students. One of the problems with some of the free college proposals is how we can educate all those students, how we can give them a quality environment. The federal government can certainly increase the size of the Pell Grant, which is financial aid or low and moderate income students, so students will have more grant aid to pay, and the federal government must increase its oversight and regulation of the for-profit college industry and hold colleges and universities accountable for the quality of the education that they provide to students.
So this is a thesis I am completely prepared to be incorrect about, and you both can tell me that I'm wrong. It's an exciting part of the show. Because there is an expectation that you will be able to access student loans, they can set the price at whatever they want it to be, $35,000 a year, $45,000 a year with the understanding that you will probably qualify for federal loans. Without those loans, but those eliminated, do you think that colleges would lower their prices?
There's been a lot of research on this, maybe a little bit, certainly the for-profit sector, there's a lot of evidence that you raise the limits that you raise their prices. But by and large, the answer to that is no, that's not what is determining college prices. I mean, if states would put more funding into higher education, then tuition and public institutions would be lower, but that is not what's driving it. And look, if we didn't have any student aid, some people want to abolish the Pell Grant for that reason, then probably prices would be lower, there would be fewer colleges and universities and fewer people would go to college.
Better, we should have a little bit higher price and have educational institutions with resources that can educate students. Cheap isn't enough, it has to be what are you getting for your money? So this whole focus on what's the price and when the price is zero will be great. It depends, it depends on what you're going to get for your price.
After I want to know what your thought is on with eliminating loans, reduce the price of college because colleges would know that you couldn't access a spare $20,000. I think we need state funding, we need federal funding for education. So it sounds like you kind of agree on that more money for education, more money for education. And there's the 66 fix proposal in California, which basically says for a small increase in your state taxes, we can reinvest in the California system.
So I think there are state possibilities even if we're not about to get college for all from this Congress. And I think that we're not. The fact we're not going to get college for all from this Congress is part of why the debt collective is pushing for student loan cancellation via executive action. Why free?
Why free is the objective? I know you just said that we're not going to get it in this Congress, but I'm interested to hear why free at all. I mean, I hear in the word free a double entendre, right? So one is free as in cost and the other is free as a named it freedom.
This is actually about creating a free and equal population that is capable of governing itself again to me this ties back to my interest in my work on the subject of democracy. What is society for canceling student debt in 2021, the executive action, which Joe Biden can and should do is one way of saying we've made a mistake. This has been a policy failure and we're doing something about it. Of course, it's not the solution.
We're figuring out what the real solution is. Let's do something as a society that's saying, hold on. This is out of control. Just to show that we can actually admit our mistakes and take some little step to getting back on track and building a system that actually aims at equity and actually functions and isn't destroying people's lives.
So I think, you know, we share a lot of the same goals in terms of the kind of society we would like to see. I think the idea of forgiving our student debt is so inequitable. It offends me so much to think of it as progressive because I want people to be thinking this way about policies that will really help the people who need it most. And the people who need the most help are not the people who have large amounts of student debt.
So it's just a difference in what we see as a solution and a constructive step on the road to building a society where more people have people opportunities and where subsidies, you know, go mostly to people who really need them, not to people who have had the biggest benefits from our society. But right now we have a two-tiered system where people who have family wealth get their tuition paid for. If you have student debt, you by definition, do not have family wealth. Your parents are billionaires and not billionaires.
You can't be economically vulnerable if you are as the statistics say, you come probably from a black or Latinx household, that debt drags you further and further and further into poverty. Right. I mean, you know this. I know you know this, Andy.
What frustrates me, I'm sorry, but it's just that it is not true that people from affluent families don't have student debt. The people with the largest debts are people who went to medical school and law school and so on. That's not the people from the lower income backgrounds. So I agree with you about the plight of the people who cannot afford it.
I agree with you about the race issue. It's huge. Black students are disadvantaged in so many ways and the student debt problem concentrated in that community is one that we have to address in lots of ways. But the idea that if you're not needy, you don't have student loans, that's just not the case.
So I would like to rebar again with Sandy and say, okay, you said 10,000 at some point. I'm saying, all, you know, let's meet at 75 K. The research shows that that's the ideal amount. So Senator Warren and Schumler are saying that they want $50,000 of debt canceled because of the racial wealth gap.
The 50,000 is based on research from 2016. The researchers updated the number because debt has grown. And they're now saying actually the optimal debt cancellation to close the racial wealth gap is 75. So that gives you an example of the acceleration we're facing here.
How can the solution to the racial wealth gap be a policy that leaves half of African American households totally out? Because African Americans, black people enter the workforce precisely because they need to compete on an even playing field with their white counterparts. And so they disproportionately interest. Most debt is held by white people.
Well, yeah, because there are more white people. Also speaking as a black person who went to college, black students are more likely to turn to student loans and are more likely to default on their loans. Absolutely. Absolutely.
The assumption here, I would think, is that this is not our only bite of the apple on trying to close the racial wealth gap. The idea would be we would do this, but also a thing about housing reform, occupational licensing reform, eliminating qualified immunity. But Sandy, you're shaking your head. You are still in disagreement here.
It is true that more black students than white students borrow. We are not going to have a successful society unless we figure out how, look at the European countries that have student debt programs that work, they're income driven, they're not that different from ours, but they withhold it from your paycheck and it's automatic and you don't have to go through a bureaucracy. We can do that. We haven't chosen to do it, but we can do it and it will be a long term solution.
If we can't structure good government programs, then we're in a total mess because we're not going to solve any of these problems. Astera, you are shaking your head, Viamit late. This is a very visual podcast. So, Viamit late.
I mean, first of all, I say that Derek Hamilton, who is the leading economist on the racial wealth gap, says cancel all student debt for the maximum benefit. And he would, I know what else to say. This is not our only bite of the apple, right? This has to be coupled with all these policies.
Why dream of some perfect bureaucracy where people take out loans and then they're automatically enrolled in the right payment plan? I mean, let's go back to reality. The nightmares that people are living in because of these programs just make me feel like, why would we aspire to making this root Goldberg's machine work when we could fund things directly? We could be very generous.
Pell grants let people have the space to live that other countries do that. What is society for? The stereotype of the doctor or the lawyer who might get their debts canceled is this conard that's got to go. We know that law school does not necessarily mean you're going to get a high paying job.
If you want to go into public service, you're really, really underpaid. And the fact is, as a citizen of this country, I want there to be doctors and lawyers who aren't burdened by hundreds of thousands of dollars of debt and can serve their community. I'm thinking of one member of the debt collective. His name is Armin Henderson.
He's a doctor in Miami. He grew up in Philadelphia, black, just right? He's right above the poverty line. He has $600,000 for medical school.
And he spends every day going out and giving homeless people tests for COVID. I mean, why? So when you invoke this doctor, who might get their debt canceled, I'm like, yeah, Armin would be free to maybe plan for his retirement or buy a house. That's not such a terrible thing in my book.
Yeah, but we can't use anecdotes like this very remarkable unusual person to set a couple of policies. And if you forgave all student debt tomorrow, then next week there would be people with new student loans. So that's not a reason to keep people trapped just because the system's not solved. We don't go, oh, well, you might get a break.
It's not just that it's we're talking about a huge impact on the debt and the deficit and limit. And if you don't think Congress is going to do less for people in need because we just added, you know, a trillion and a half dollars over time. Students, not the same type of spending that is not the door and the government knows it's not going to get it back. That's why there's IDR.
That's why there's one forgiveness. The government expects to get student loans for pay. It doesn't expect to get all the back. The official estimates do not claim that all the money is coming back.
No, all the money is not going to be paid back, but a significant share is on average. They expect to make money. And when it doesn't get paid back, it adds to the debt. And we're not to the point where Congress says, hey, people need that.
We're just going to do it. There are absolutely trade-offs. And we have to acknowledge those trade-offs. Okay.
This is the most I've thought about my own student debt and anyone else's student debt in a very long time. Most of my life. Yes. Student debt.
It occupies your mind. Dr. Sandy Bomb is a non-resident senior fellow at the Center on Education, Data and Policy at the Urban Institute. And As for Taylor is a documentarian, author of the book Democracy May Not Exist, But We'll Miss It When It's Gone, and the co-founder of the debt collective.
Thank you both so much for joining me today to talk about this issue. Thanks so much. Thank you so much for having us. You can find links to their op-eds about student loans in this episode's show notes.
If Oprah's interview with Prince Harry and Meghan Markle has you in your royal feelings, do what I did last week and take a deep dive into the work of Dr. Lucy Worlsey. She's a British historian who is the chief curator at historic royal palaces. And she happens to be the queen of royal history.
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The argument is a production of NY Times Opinion. It's produced by Phoebe Lett, Eliza Guterres, and Bishaka Darba, edited by Allison Bruschek and Polish Human, with original music and sound design by Isaac Jones, and fact-checking by Kate Sinclair. Special thanks this week to Shannon Bosta and Vicki Merrick. You know, if only Sandy and I were the polls that were debating this, that would be excellent, so that's right.
Yeah, I think we could get comedy, but alas, there's other people.