Should You Have to Pay Back Your Student Loans?
Is your student loan debt immoral? Two thinkers weigh in.
Mankaprr here, Death, Sex and Money’s summer 2017 intern.
When I got to WNYC Studios in June, the DSM team was prepping for the debut of “Our Student Loan Secrets.” It’s a multi-platform project (Two podcast episodes! Animated videos! An interactive website!) on college debt’s effect on thousands of lives.
In college, I studied politics (and with a little work and a lot of luck, I graduated debt-free). I’m interested in what student debt reveals about who has power and why. But that’s not reaaallly what “Our Student Loan Secrets” is about. It’s about how student loan debt, or lack thereof, makes folks feel. And DSM found that so many of you with debt feel cheated. “I feel fooled and bamboozled about the American dream,” said Brandy, who can’t seem to earn enough to outpace the debt of her multiple degrees.
Your anxieties raise big, political questions. Should higher education be a right? Should everyone go to college? Are the government, the banks, and the universities playing us? And most interestingly, asked listener Ian via email, if we are being played, shouldn’t we do something about it?
“By continuing to reinforce the idea that repayment is ethical,” wrote Ian, “you re-enforce debt stress and the feeling of failure and shame.”
Woah.
So I talked to two people who have thought a lot about these hard questions. I started out by asking them Ian’s question. Should we feel any moral obligation to pay back our student loans?
Dr. Andrew Ross doesn’t think so. In 2014, the professor of social and cultural analysis at New York University published a book titled Creditocracy and the Case for Debt Refusal. Here’s what he had to say to me.
“In the case of debts that are incurred by people who are trying to access basic public or social goods, like education, I consider those to be highly immoral. Public and social goods should not be treated as vehicles for generating vast amounts of private profit, or even public profit in the case of government lending programs. The Department of Education’s student lending program generates massive amounts of profit for the government, tens of billions of dollars every year. And that money is not plowed back into education, it’s used to pay down federal debts, a lot of them accrued from foreign military ventures — and that’s what taxes are for. If you get into the mindset of treating interest from federal student loans as a form of taxation, that’s a whole other level of government immorality. I can think of few things that are more immoral than that.”
Ross is both an activist and an academic. He’s helped to lead national debt strikes — refusals to pay back federal student loans — on behalf of students ripped off by for-profit colleges. In the wake of the strikes, the Obama administration committed to voiding those loans (but there hasn’t been much action on that promise.) I was fascinated when Ross told me about another project he was involved in, called the Rolling Jubilee, that took canceling student loan debt into their own hands.
“Basically, we raised money — $750,000 in all — in order to buy private debts that had been sold on the secondary debt market, which you can buy very cheaply. We bought more than $30 million dollars worth of debt and basically abolished it by not collecting on it. That project received a lot of publicity, and the publicity was the most important part for us because it was a form of public education — that people were able to understand that debt to private creditors is sold for pennies on the dollar to a debt collector who then tries to collect on the full dollar of amount. Knowing that, you’re going to have a different conversation with a debt collector when they harass you on the phone. We abolished a whole range of different kinds of debts, from medical debts to student debts.”
Andrew Kloster is an attorney and former fellow of the Foundation for Individual Rights in Education and the conservative Heritage Foundation. Kloster disagrees with Ross about the morality of intentional student loan default. But he’s more concerned with what he considers the impracticality of it. Sure, he thinks people should be more easily able to get out of student debt — but it should come at a cost.
“I do think that, in general, people have a moral obligation not to lie. When you go to your friends house and you say, ‘Can I borrow your bike?,’ you intend to give that back. And it’s the same for student loans. Everyone knows that when you borrow money, you do have a moral obligation to pay it back, all things being equal. On the other hand, we know that the student loan debt right now is over $1.3 trillion dollars, and there are many people that are having a hard time paying their loans back. Well, let’s say we forgave everybody’s student loans. That would raise everyone’s taxes to pay off that. Not to mention, people may find a way to defraud or pocket the cash. People shouldn’t take out loans that they don’t think that they can pay back, but our system should be designed to allow fail-safes when people can’t pay back loans. Bankruptcy is economically efficient. There’s a give and take. In bankruptcy, when you get rid of all your loans, one of the things that you do is you liquidate your property. I think one of the things we should have, maybe, in the United States is to allow student debtors to discharge their loans in bankruptcy, but then, maybe they have to give their degree back, or something like that. And that’s in order to discourage people from making irresponsible decisions.”
Alternatively, Ross is convinced that intentional default could change the way education is financed in America for good. In 2011, he and the Occupy Student Debt Movement tried to convince one million student debtors to default in unison, as an act of protest.
“The fact is that one million student debtors did actually default that year, but they defaulted on an individual basis. If they had defaulted collectively, as we had imagined, then we would be having a completely different conversation today. The political landscape would look a little different.”
What struck me was what these two experts seemed to agree on — that it would make sense for less people to go to college. “I do think that everyone has the right to work for a living and to not have the government down their back,” said Kloster, “[but] hope that many fewer people in this country go to college, I think that will help this.” Ross puts it like this:
“Many are familiar with the statistics that show that if you have a college degree, your overall lifetime income is gonna be so much greater than if you only have a high school diploma. A statistic that most folks do not know is the very low percentage of jobs in the American workforce that actually require a four year degree — only 30%. The other telling statistic is that more than half of college graduates that are actually holding down a job are in a job that doesn’t require a four year degree, so there’s clearly a huge mismatch between supply and demand in our economy. On the one hand, you have government leaders and elites imploring students to go to college. In the Obama Administration, there was a lot of preaching from the top about how it was necessary for people to go to college to realize their economic dreams. And yet, the government is not creating high-wage, high-income jobs for these students who are graduating from college. Again, I feel it’s immoral to promise from the very top, from the White House, that in the 21st century knowledge economy, you’re going to be very poor unless you go to college, while you’re not doing much in the way of industrial policy to create jobs.”
In spite of this moment of philosophical harmony, Kloster reminded me that unlike Ross, he doesn’t think radical debt strikes are the right response to the moral missteps of governmental and financial institutions.
“All that I’m saying is when you’re working in a low paying job, you’ve got a lot of debt — what you want to hear from the news, from the government, from everybody is, ‘Here’s who I blame, let’s just take the money from them and give it to me and everything will be better.’ And that’s just not how things work.”
So, where do you stand? Let us know at deathsexmoney@wnyc.org.
