The Student Debt Bomb


President Obama doled out the most shocking stream of commencement cliches to the graduating class of Barnard College Monday. To offer just a taste:

“The question is not whether things will get better — they always do… The question is whether together, we can muster the will — in our own lives, in our common institutions, in our politics — to bring about the changes we need. I’m convinced your generation possesses that will.”

Whatever else they possess, the class of 2012 possesses an enormous amount of debt. Heavy borrowing’s not only for graduate students or drop outs from for-profit colleges any more. It’s also for Barnard alums. Forty eight per cent of those graduating this year from Barnard (where the price tag of an education stands at $58,078 ) have taken out loans to pay for their bachelor’s degree. As the New York Times recently pointed out, “Nationally, ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education — up from 45 percent in 1993.”  For these students things aren’t getting better, they’re getting worse.  Their will has nothing to do with it.

Standing at $1 trillion and rising fast, outstanding student debt is a bubble set to burst. The New York Times report compiled shocking numbers: “For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000.”  Not just the students but also their parents are borrowing. Loans to parents for the college education of children have jumped 75 percent since the 2005-2006, according to the Times.

Just like that first home, millions spent on marketing have made a college education seem like an American must-have. Yet ever since the early 1980s, college tuition has risen faster than wages, and public education spending’s been cut back. As the Times reports: “If the trends continue through 2016, the average cost of a public college will have more than doubled in just 15 years,” even as this year, “state and local spending per college student, adjusted for inflation, reached a 25-year low.”

If you liked the mortgage crisis, you’re going to love the education debacle.  College admissions officers, like mortgage  loan officers, tend to urge borrowers not to worry about the costs. Students have always defaulted. The federal government’s pre-approved the bail-out.  Today, nearly one in ten students default within two years —  about twice what it was five years back. Consumer bankruptcy lawyers have been raising an alarm for a while.

“Take it from those of us on the frontline of economic distress in America,” said William E. Brewer Jr. of the National Association of Consumer Bankruptcy Attorneys earlier this year.  “This could very well be the next debt bomb for the U.S. economy.”

Except it’s a different sort of debt bomb. It the sort that individuals have to carry about. Thanks to federal law, there’s no declaring bankruptcy on student loans and there’s no debt relief. There’s no getting a refund for an education that did you no good. At the end of the day those payments can be drawn directly out of your social security check. Pam Brown, a Columbia college graduate student, is working with the OWS based group, Occupy Student Debt. “The system is a predatory one,” she says. “There’s an assumption students won’t be able to pay their debts. Refinance, take out an expensive private loan and the interest rates compound fast.”  As Brown says: “the government and the banks both had their hands in this pot.”

This particular bubble doesn’t burst on Wall St. “It oozes over a generation,” says Brown. “In a sense it’s a pre-approved government bailout. The government protects the college, but each debtor is paying so much throughout their lives that it’s impossible to live a regular life.” Says Brown.

One last turn of the knife: predatory lending patterns are re-inscribing the racial divides that President Obama’s happy talk about social change would let so many Americans forget.

“Whenever you feel that creeping cynicism, whenever you hear those voices say you can’t make a difference, whenever somebody tells you to set your sights lower — the trajectory of this country should give you hope.” Said the president.

The reality is, today’s trajectory is towards ever greater divergence, rural from urban, the very rich from the rest, but especially black from white.

ColorLines fills in what the New York Times leaves out: whereas about one in four white Americans graduate with debt less than $12,000; one in three African Americans owes more than $38,000. (The Barnard graduating class is just 4.5 percent African American.) The same phenomenon we saw in the housing crisis prevails in education: it’s perilous to be “borrowing while Black.”

Just as black borrowers were more likely than whites to be offered risky, sub-prime mortgages (even when they could afford regular sort) so too, Black students are more likely than any other group to take out high-risk private loans for college. Private loans (which are on the rise) come with none of the deferments for unemployment, income-based repayment, or loan forgiveness options attached to federal student debt. According to the Project on Student Debt the percentage of African-American undergraduates who took out private loans quadrupled between 2003-04 and 2007-08, from 4% to 17%. The next batch of numbers are sure to be worse. Suffice to say, having lost all the wealth they gained subsequent to the Civil War in the housing disaster, the options for the next African American generation are quite literally being cut off.

Barack Obama said at Barnard:

“If you’re willing to do your part now, if you’re willing to reach up and close that gap between what America is and what America should be, I want you to know that I will be right there with you. If you are ready to fight for that brilliant, radically simple idea of America that no matter who you are or what you look like, no matter who you love or what God you worship, you can still pursue your own happiness, I will join you every step of the way.”

Sometimes commencement cliches are just dull. At other times they hurt.  “Joining with” today’s graduating class requires forgiving student debt. For all our sakes. Nothing else counts.

LAURA FLANDERS is the host of The Laura Flanders Show coming to public television stations later this year. She was the host and founder of GRITtv.org. Follow her on Twitter: @GRITlaura. 



November 25, 2015
Jeff Taylor
Bob Dylan and Christian Zionism
Dana E. Abizaid
Provoking Russia
Oliver Tickell
Syria’s Cauldron of Fire: a Downed Russian Jet and the Battle of Two Pipelines
Patrick Cockburn
Trigger Happy: Will Turkey’s Downing of Russian Jet Backfire on NATO?
Robert Fisk
The Soothsayers of Eternal War
Russell Mokhiber
The Coming Boycott of Nike
Ted Rall
Like Father Like Son: George W. Bush Was Bad, His Father May Have Been Worse
Matt Peppe
Bad Policy, Bad Ethics: U.S. Military Bases Abroad
Martha Rosenberg
Pfizer Too Big (and Slippery) to Fail
Yorgos Mitralias
Bernie Sanders, Mr. Voutsis and the Truth Commission on Greek Public Debt
Jorge Vilches
Too Big for Fed: Have Central Banks Lost Control?
Sam Husseini
Why Trump is Wrong About Waterboarding — It’s Probably Not What You Think
Binoy Kampmark
The Perils of Certainty: Obama and the Assad Regime
Roger Annis
State of Emergency in Crimea
Soud Sharabani
ISIS in Lebanon: An Interview with Andre Vltchek
Thomas Knapp
NATO: This Deal is a Turkey
November 24, 2015
Dave Lindorff
An Invisible US Hand Leading to War? Turkey’s Downing of a Russian Jet was an Act of Madness
Mike Whitney
Turkey Downs Russian Fighter to Draw NATO and US Deeper into Syrian Quagmire
Walter Clemens
Who Created This Monster?
Patrick Graham
Bombing ISIS Will Not Work
Lida Maxwell
Who Gets to Demand Safety?
Eric Draitser
Refugees as Weapons in a Propaganda War
David Rosen
Trump’s Enemies List: a Trial Balloon for More Repression?
Eric Mann
Playing Politics While the Planet Sizzles
Chris Gilbert
“Why Socialism?” Revisited: Reflections Inspired by Einstein’s Article
Charles Davis
NSA Spies on Venezuela’s Oil Company
Michael Barker
Democracy vs. Political Policing
Barry Lando
Shocked by Trump? Churchill Wanted to “Collar Them All”
Cal Winslow
When Workers Fight: the National Union of Healthcare Workers Wins Battle with Kaiser
Norman Pollack
Where Does It End?: Left Political Correctness
David Macaray
Companies Continue to Profit by Playing Dumb
Binoy Kampmark
Animals in Conflict: Diesel, Dobrynya and Sentimental Security
Dave Welsh
Defiant Haiti: “We Won’t Let You Steal These Elections!”
November 23, 2015
Vijay Prashad
The Doctrine of 9/11 Anti-Immigration
John Wight
After Paris: Hypocrisy and Mendacity Writ Large
Joseph G. Ramsey
No Excuses, No Exceptions: the Moral Imperative to Offer Refuge
Patrick Cockburn
ISIS Thrives on the Disunity of Its Enemies
Andrew Moss
The Message of Montgomery: 60 Years Later
Jim Green
James Hansen’s Nuclear Fantasies
Robert Koehler
The Absence of History in the Aftermath of Paris
Dave Lindorff
The US Media and Propaganda
Dave Randle
France and Martial Law
Gilbert Mercier
If We Are at War, Let’s Bring Back the Draft!
Alexey Malashenko
Putin’s Syrian Gambit
Binoy Kampmark
Closing the Door: US Politics and the Refugee Debate