The Student Debt Dilemma | CBS Reports

There is now over 1.7 trillion dollars in

student

loan

debt

and this is not just some kind of millennial youth problem, this really touches every facet of American life, both individuals and communities, our economy and our country, in the name of God, why are we? punishing millions of people because they chose to receive an education that makes no sense another day more in

debt

is what I feel, it feels like something huge that I will never get out of, one of the things that scares me is becoming a father, I just don't see how that is possible with

student

loan debt hanging over my head, the idea of ​​student loan cancellation is not something I ever thought would be on the national political agenda, this is very poorly targeted at the people you probably need at least aid.

I don't think student debt forgiveness is a good policy. If we were to cancel student loans, we are basically making the decision to provide relief now and have some future generations pay for it later. This would be a moment for the federal government to say we had a great idea it started with the best of intentions and it went off the rails it's time we not only apologize but extend it I'm from Mississippi I grew up in a small I think at that time the population of the city was maybe from 1600. Growing up I felt like nothing could stop me, nothing could stop us.

My father served in the United States Army in the National Guard. In fact, he went to Iraq. My father because he was in the army. He had two jobs, he worked in the factory and he was in the national guard. My mother worked in the factory for 20 years. That factory closed until then. She was dedicated to taking care of a typical middle-class family. Whatever I wanted, I pretty much got it, so I felt like my parents were rich. It wasn't until I went to college that I realized that wasn't the case when I was exposed to what I guess being middle class really meant.

My parents made you know too much money to get help, but they didn't make enough money to They could just write a check and pay for school, so loans were really my only option. I went to Delta State, majored in accounting and did very well, but then the financial goals really affected me every semester. Situation in which the semester would begin. I would need to buy books. I had no money the first semester. I tried using my credit card and it worked fine, but then I used those credit cards. You know, those bills had to be paid.

Then I got stuck in credit card debt and then I realized you know I can't do this anymore. This is a cycle I don't want to be in and so I decided that maybe going to college right now isn't the best thing. The best option for me, maybe I need to work, save some money and then go get my degree. I feel like student loan debt, my student loan debt personally, is very crippling, in general, for every attempt at my degree, my current balance is north of 30,000 then when you graduate and look at the balance or, In my case, you don't graduate, but yes, you still have these student loans that you are responsible for.

I know I've made some payments, you know a lot. Many times I've had to put it off just because it's about making these payments or paying rent and of course you have to have a roof over your head. One of the things that scares me is becoming a father. I just got married last year and my my wife is with me like she, hey, you know I'm ready, are you ready? So, you know, I would love to be a parent, but then I look at the cost of child care and I look at my student loan balance and it's like then.

I'm still going to be balancing whether I make my student loan payment or paint daycare, you know, and I don't want to default on my student loans, but at the same time, if I'm going to become a parent, I want to make sure that my child has the best life possible and I just don't see how that's possible with student loan debt hanging over my head. Student loan debt is crushing more and more Americans. Some wonder if a college degree is worth the price. expert says college debt is a ticking time bomb that could have devastating effects higher costs of higher education are creating a stranglehold on mobility for some and many say it's getting worse we often hear about the student loan crisis alone in terms of these huge balances, but you really have to think about the impact that this is having on people and on our country and when you dig deeper, it's truly petrifying every 26 seconds of every day that a student loan borrower defaults and that's Even before the pandemic hits, this affects your ability to get a home loan, maybe even get a job, and you know that only scratches the surface of the impact this debt is having.

There is now more than $1.7 trillion in student loan debt. There is more student loan debt than all. auto loans there is more student debt than all the credit card debt in America, so for the last decade I have been traveling the country talking to people from all walks of life about student loans and one of the things that that's really stuck with me is how the student debt crisis is really a silent crisis, you know, maybe unlike the mortgage crisis, where you know you can see the street, you know there used to be a house owned by your neighbor. which is now owned by the bank, you know that this does not exist.

Something tangible visual that you can see when your neighbor defaults on a loan or your neighbor is struggling to save for retirement because their student loan bill never seems to go away and I think that has also hindered our ability as a country to address both. the root causes of this crisis and the consequences that it's had on American families to really address this problem, you know, we have to think about it holistically, is to make sure that the next generation doesn't face the burdens that this generation has, it's Help borrowers with student problems. debt now against the predatory industry that has targeted them for too long and yes, it includes removing and reducing some of the burden that student loan borrowers currently have.

The push to convince President Biden to eliminate student loan debt for tens of millions of Americans is gaining momentum, we canceled 50,000 student loan debt and what that will mean is that 85 of those who are struggling with loan debt Right now, about 40 million people will see their student loan debt completely erased in one stroke from President Biden. can provide relief to tens of millions of families across the country, close the racial wealth gap, and put our nation on a path to a just and equitable long-term recovery. I don't think student debt forgiveness is a good policy. This could be a very serious moral. danger problem and when I say moral hazard what I mean is that people who are thinking about taking out loans and thinking about how much they should take out in loans, will look at the fact that a group of people just got their loans canceled It seems deeply unfair that someone who borrowed yesterday will be discharged and someone who borrows tomorrow won't, and I think the people who borrow tomorrow will make a very compelling argument that they should also have their loans forgiven if we canceled student loans. we're basically making the decision to provide aid now and have some future generations pay for it later, which is particularly egregious since we're also saying we're not going to change any parameters of the student loan system, so we'll have the same amount . debt in the future and people will pay taxes to pay for these past policies when we think about policies when we think about offsets what is the best way to use the next dollar to use the next dollar of the taxpayers that we want will have the maximum effect and I think we should consider policies that can help people on the lower end of the income spectrum, especially now that they tend to be people who didn't go to college and didn't take on any debt, I think.

The first thing I always like to point out when I talk about student loan cancellation is that it's a solution that ignores the solution that already exists: the student loan safety nets that already exist, called income-based repayment and loan forgiveness. loans for public services, which these programs alleviate. unaffordable monthly payments to people who are low income maybe they are low income because they didn't finish school or they finished school but it didn't work for them for some reason and then in those cases the benefits of a lower monthly payment and ultimately forgiveness of their debt is awarded only to people who did not see a great return on their education.

The problem is that we never had a moment where we stopped and wrote new legislation that said we want all borrowers to be eligible for that. That kind of benefit, instead, what happened was that through a patchwork of executive actions and bits of legislation here and there we ended up with a cobbled together universal safety net for student borrowers, so that while every borrower in the country They have access to services based on income, payment and this potential for forgiveness in the future through a variety of different programs, the programs have different parameters and it is not surprising that it is really difficult for people to navigate these programs, education on average is still a very good investment, so even though people are borrowing a lot of money go to college go to grad school for the most part in the long run those people are better off financially even with that debt than if they hadn't gone to college and were simply stuck earning the salaries that are generally available to people without higher degrees, so when you think about how well a widespread cancellation or jubilee event serves the country, the challenge is that it provides a lot of benefits to people who are already doing quite well in this economy.

I was listening to the radio and hearing a lot of talk about canceling student loans, the reasons against it that I was hearing was that it would primarily benefit people with higher incomes, people with advanced degrees who would then make more money because of their advanced degrees, which which I mean, I'm not an economist, but in some ways that makes sense, but the first thing that came to mind is that that is not true for teachers, good morning, Lorena, thank you for arriving early, today we are going to be in a pear platform, we've experienced wage stagnation, you know, over the last few decades. adjusted for inflation or that in some places our salaries have gone down, I felt like we were all loved along with doctors and lawyers and I can't speak for them, I don't know, maybe they have a hard time paying too, but I just know that my experience It was just that.

I don't feel like my advanced degree has put me in a better position to pay off my loans. I just feel like my advanced degree put me in even more debt. Monday is the first period it will start. 10 minutes, you have enough time to take a break and have a glass of water. I started school in 2014 so I took out 50k in student loans and finished my masters program in 2016. I'm making the income driven payments which is really the only way I can afford to make them and I paid nine thousand dollars of the loan but only of the interest.

I only paid 97 dollars in principal, so if I was doing the standard payment, I think it would be around 600 a month, but that's not an option for me financially, so I make the income based on the year, whether it's like 2 20 or I think I've paid as much as 280. But since I'm paying less the interest accumulates more so it feels like quicksand and it feels like a huge thing that you'll never get out of, that's what kills me because I've been, You know, a couple of months before the age of five. making payments was for me at that time the scariest thing I had ever done in my life was take out 50,000 worth of student loans the only reason I could justify it to myself was one I would have always had a job it's a profession very safe and two, you know, I thought, well, there's teacher loan forgiveness right now, we have a state with a patchwork of loan forgiveness, the federal program is ridiculously inadequate for most subject areas if you teach five years in a high-needs school. you get five thousand dollars per donation if you teach in a subject area where they need teachers, if you teach math, science or special education, that's 17,500, but stillFive thousand dollars is one-tenth of the original loan balance you had, so teacher loan forgiveness is What's left is almost like it feels like an insult, and besides, if you accept loan forgiveness for those five years , doesn't count toward the 10 years of public service loan forgiveness, so it's one of the things we now understand better than we do.

What we used to do is that when people make financial decisions, there are many ways in which those financial decisions are manipulated and so when you see debts increasing very quickly and when you see people suddenly becoming more and more willing to take on some risky debts, you have to ask yourself the question, uh, why, so, it's not that people are somewhat ignorant or that they lack a sense of self-control, this is not a payday lender, um, and this is your federal government, and this is a federal government that has told you. that this is not only good for you but also for the nation, you know, I think part of this is that sometimes we forget the origins of these deaths, it was called the national defense education act in 1958 when we were responding to sputnik and saying that you know this is a national priority and then in the civil rights movement we said this is a priority for equity, inclusion and racial justice and so when people respond to their federal government because you know we trust at least us, We hope to trust our federal government and they are responding to something that is supposed to improve their lives at that time.

They are more willing to take on those debts if we go back to 1975, it was really different in the 1970s, about 12 percent of students used student loans and the amount of their loans was smaller and in the '70s what we also did was we had a system where we used Pell grants, which are a student grant to support not only low-income students but also to those with middle incomes, so that almost anyone could go to college debt-free, but then in the 1980s the Reagan administration in Congress defaulted. appropriately for PELL grants and we went through a decade where students were having trouble finding money to go to college, so in the late 1980s a group of financiers and bankers said, "You know we have a solution." instead of using grants to pay for college. for most people we could use loans, but if we are going to make loans so that we bankers can make those loans, we actually need the federal government to give us a subsidy for that so that we are guaranteed to win money. those loans even if students are unable to pay and these big changes that they were pushing for were adopted by Congress in 1992 and enacted and implemented by the first Bush administration and the Clinton administration and so between 1992 and 1994 the Congress and the federal government They radically increased eligibility for student loans and doubled the amount students could borrow while in college, so we went from having about $20 billion in student loans each year in the 1980s to having $120 billion. million dollars in loans per year at the time.

But there's a twist, and the twist comes in 2010 when the Obama administration says, "Wait a minute, why are we paying this subsidy to the banks to make these loans? We could make the loans ourselves as the federal government, cutting out the middleman." what we have". We will save American taxpayers $68 billion over the next few years. We could use the savings to lower student loan interest rates and we could even use some of the savings to provide more grants like the Pell Grant for higher education and so on in 2010 as part of legislation passed by Congress and the The federal government stopped giving that subsidy to the banks and the department of education started making the loans itself, which in some ways is better, but at the same time this put us on a course where the US department of education .USA effectively became the largest commercial bank in the United States in 2017 with nearly $1 trillion in outstanding student loans in its portfolio and we haven't seen student debt go away as a problem since then, it's only gotten worse.

I think it's fair to ask the question. We really want the Secretary of Education to effectively be the CEO of America's largest consumer bank. Unfortunately, what we have seen time and time again is a variety of mismanagement incompetence and even you know the vileness when it comes to how the department actually manages debt. on behalf of tens of millions of people and we have seen how for-profit student loan companies, schools, student loan debt collectors will bend over backwards, turn every corner, often with no accountability, no standards and no repercussions when borrowers are scammed, we also see how the student loan industry particularly targets communities of color and borrowers of color, we have seen cases of how for-profit schools engage in exclusionary practices, particularly offering degrees without value in the hardest-hit communities, we see how student loan servicers will fail to make borrowers of color access critical consumer protections, making them more prone to delinquencies and defaults, and this happens again and again , where not only is it more debt, but it is the way the student loan industry generates unnecessary interest rates and predatory products that only make the student debt crisis even worse.

The other thing to keep in mind here is that there were a lot of colleges that were seeing their expenses increase and the only thing they could count on was the fact that the demand for education was not going to go away while the federal government backed those loans and you you have a really strong market for making those loans, whatever your expenses are or what they are, the students will continue to come and that's exactly what's happened, I mean, they and they've gotten into sort of situations where now there are beautiful dorms at all these universities, great sports facilities, etc., but at a very high cost, but the other thing we sometimes forget is that while the cost of college has skyrocketed, the income people make has not. . and also realize that if you are black or latino you are likely to start your career with a lower starting salary, even in the same occupation these disparities did not magically occur, they are consequences of generations of systemic racist discrimination and what I call political violence that systematically denies Black and Latino families the opportunity to build wealth, forcing our families to take on higher rates of student debt for the same opportunity as our white counterparts, who grew up in South Carolina, the only thing I heard over and over again, as a young black man, that getting your education is the one thing that can't be taken away from you, so you were supposed to do whatever it took and the family was willing to do whatever it took to get it done. just so you know, getting their education was what was required, so they both got the same education and if we think about this in terms of how much it cost to buy a car, one of them got that education and only had to buy one car.

Another one got that education and had to buy two cars and they're finding that education doesn't benefit them as much in the job market, although it does do something for you in the job market, but not as much as it does for their white counterpart and then you see this whole thing open up. gap, so after leaving the delta state I decided to move to Virginia to pursue Europe I immediately felt a sense of relief because being accepted into the program reminded me that I still had what it took to succeed. I still had what it took to achieve the goals I had set for myself and that sometimes it is okay to look for different alternatives to achieve those goals and that university is not the only solution.

You know, I've been at the same company for eight years. I started as an intern, got promoted or hired as a junior engineer and then promoted to senior engineer and now my role has completely changed and I am a scrum master. I feel like I don't need a title. To be able to continue working or even get promoted right now, if I do the math 10 years from now, I will have paid off 30,000 in loans, so that's money that's not going into my retirement, it's not going to a mortgage. I'm not accruing principal or interest, you know, it's just money that's gone, but with my students I really stress about having a plan, you know, I think we've gotten away from this kind of pollyanna like just taking out loans.

It'll be okay, I think we really help them at our school look at scholarship opportunities, you know, go down these different routes and we're really very upfront with them, even though it's not the right route for all students, I think for the vast majority. students, I still recommend it and that's it, all the time we have, bye guys, bye, happy birthday again, Maria, bye, Miriam, bye, Emmanuel. I think we're at a place in American culture where we've been led to believe that having a college degree. a bachelor's degree or higher is somehow part of the American dream and without it we are a failure, you know, we are celebrating education a lot in this country, which is wonderful because we want people to be educated so that they can provide more, they themselves contribute more. to your country and that's great, but not everyone needs a degree.

We know that students are signing on the dotted line without knowing what they're signing up for, and we're seeing more and more that parents, even middle-class ones, are signing and saying, "Okay, I'll cover the rest with my own personal debt." and it's a debt they can't pay. There's no silver bullet to a $1.7 trillion crisis and we really need to address this from all angles. You know, we need to improve consumer protections for student loan borrowers now. don't be second class citizens forced to deal with abuses that people with a mortgage or a credit card don't have to face we need to improve the department of education to ensure that they are actually we are doing a much better job overseeing these programs, we need to make college more affordable for the next generation, so we're not just dealing with this, you know, in another five years and on the table should be debt reduction, debt cancellation for millions of people in all of this country that have been retained because of it, forgiveness has a cost, it depends on the cancellation policy that is proposed, but it is hundreds of billions of dollars or up to a trillion dollars, that cost that is added to the federal debt, for making taxpayers ultimately responsible for the federal debt.

The other thing I think we need to think about is that there is an upper limit to the amount the federal government can borrow. Obviously we're not there yet, but there's an upper limit, so if we pay off a trillion dollars in student loan debt when the next crisis hits, will we have as much capacity to deal with that crisis as we would otherwise have? Part of this is simply recognizing the humanity of the debtors, recognizing that they had ambitions when they incurred those debts to leave. off to college and wondering what would happen if they had a fresh start.

We give a new start to people who earn a lot of money. You know, when banks start to fail, they start again if we want to correct the student's mistakes. loan problem one of the ways to write that mistake is to say sorry we made a mistake this would be a moment for president biden to say we had a great idea it started well with the best of intentions and it took off . the rails so because we were wrong it is time that we not only ask for forgiveness but extend it to you