Reparations and the Student Debt Wars

Photograph Source: DonkeyHotey – CC BY 2.0

The public college and university system in California was tuition-free during the sixties and into the seventies when the baby boomers were attending college in record numbers. Favorable budgets helped stoke the demand and new campuses were built to accommodate this explosion, propelled by an inclusive ethos special to this left-liberal era where a different breed of Democrats governed. This trend, also evident nationwide, revived the spirit of the free school movement popular in the early 19th century that encouraged the creation of literate citizens for a more vital democracy.

The pedagogy of education was accordingly different. There was a significant stress on a well-rounded critical and humanistic education for education’s sake. Thanks to a more favorable job market, students could experiment for a while, relatively secure in the belief that education was about more than career-niching. The evaluation process was accordingly experimental and consumer-driven, grading lax if implemented at all in some circles.

This liberal “Enlightenment” ideal succumbed to shifting trends in the 70s. A glut of new grads materialized amid an epidemic of budget deficits in a slumping economy that bred conservative solutions to a host of ills. Milton Friedman’s early-decade market-fundamentalist trounce of Keynesian economics was the authority for dealing with them. Education started to become a privilege. Ronald Reagan, as Governor of California, was an outspoken supporter of these changes. In his run-up to the presidency, however, he vowed to support the plight of grads that for so many years had faced limited job prospects—not unrelated to his enmity toward unions and the working class.

Policies since then have certainly beefed up support for the middle and upper class college grad over and against the working class, whose wages have remained stagnant since the mid-70s, but they’ve also made a college degree extremely expensive. Endless budget cuts to education have forced higher and higher tuition hikes and made student loan debt one of the most pressing concerns in recent years, and especially in the current election cycle as evidenced in last week’s debates. It may reach the danger level of the 2008 housing crisis that forced the Great Recession. This explains why there are calls now for cancelling this debt. Elizabeth Warren and Bernie Sanders have announced plans.

Warren proposes forgiving $50,000 in loans for those households earning less than $100,000 a year (estimated to cover 95% of the 45 million with debt). Those earning more would get partial—unspecified—relief, with those earning more than $250,000 being ineligible. This outlay of $640 billion would be funded by her proposed “wealth tax,” a 2% tax on those earning more than $50 million and a 3% tax on wealth above $1 billion. This forgiveness would not be taxed as income. Those with private loans will be able to convert them to federal ones in order to qualify. Sanders goes even further and would cancel all $1.6 trillion in outstanding loan debt, with no eligibility limitations. It would be paid for with a new tax on Wall Street speculation. Both propose making tuition free at public colleges (Katie Lobosco, “Elizabeth Warren’s New Bill Would Cancel Student Loan Debt for Millions, CNN, 7/23/19).

Proposals to cancel debt in the wake of the 2008 recession floundered on exactly this issue of how to apply broad general categories in a way that equitably matched the reality of the financial reversals. Are those under the $100,000 cap all equally deserving? Should all family households be considered equally deprived, no matter what their size? Should the quality of the institution the tuition is paid to be a factor? Did the borrower actually use the loan for tuition or other, possibly unrelated pleasures or investments? Do those just under the $100,000 cap really need help? Might those just over it need more help? Would $80,000 be a fairer dividing line? Should households earning above $100,000 all the way to $250,000, especially those closer to the upper limit, get any relief at all?

Sanders’ proposal to fully cancel the debt without eligibility requirements smacks of the desire to at least address the fundamental structural issues of this crisis, but the same concerns apply here. And wouldn’t his proposal work like a proportional, regressive tax—same rate for wide swatches of subjects—and give the upper ranges a greater benefit? This will surely appease the group that gave him the biggest boost in 2016, the bloc of millennials supportive of his “socialism.” So how accurate a solution to the problem can this be? How many will fall through these cracks? How many will unfairly benefit? If these numbers are too high a backlash might result. There must be a proper accounting, a precise surgical intervention to establish criteria and qualifications that will prevent the proposal from being labeled a bailout mostly for the privileged.

Sanders certainly knows this is 2020 slogan-time and if elected will likely be sympathetic with a more complex and honest re-structuring of the problem that comes closer to full reparations. But this proposal lacks the kind of focus on the working class that has marked his “socialism” in most respects (Nick Pemberton, “Reparations for Millennials,” CounterPunch, 7/8/19).

It’s the fairly recent grads who are understandably the target here. The bankruptcy law permitted the cancelation of student loan debt up until the 2005 revision passed by the Republican Congress, and tuition increases during this stretch have been especially sharp due to the post-2008 economic meltdown that gutted public budgets. So these proposals target the mini-generation that seems to be in most need. But they stop short of tackling the root causes of the tuition spikes that pre-date this current crisis, the only approach that will return value to those who’ve lost so much from the student debt wars.

Should those who found a way to pay off their tuition debt be reimbursed? What about those prevented from going to college by the artificial shrinkage of spaces due to budget cutbacks, restrictions that forced a reliance on higher tuition to compensate, imposing further shrinkages in a vicious cycle? Can one be awarded damages for the effects of a shift in ideology, from entitlement to a low-cost—even “free”—education to a cuing-up for the privilege to pay for it? Is there a way to put a value on the loss for those excluded from education because of reversals in Affirmative Action policy? Should those be reimbursed who were caught up in the market-glut era and effectively marketed out of the picture?

Stepping back and looking at this longer stretch means considering the issue of reparations, the need for a redress of fundamental wrongs from the past so that progress can be made to correct the current ones. The logic behind calls for slavery reparations, for example, is that advances in overcoming racism and in fulfilling civil rights mandates can’t be maximized until progress is made in canceling the original deficits. Otherwise a reasonably level playing field won’t exist. Too much lingering injustice sabotages efforts to move forward.

The concept of reparations emerges from war. The losers pay the winners, the victors who get what they deserve, the spoils from their position of power. These are not always the truly good guys and they can be punitive, exact too much, leading to backlashes. Punishing Germany so excessively for WWI had its consequences. The powerful can also subdue the good guys, refuse to pay reparations, and this repression can lead to further conflict, a compounding of war. Reparations therefore must approximate fairness.

The damage accrued from the policies of the past 45 years or so that have destroyed free public education and replaced it with a high-priced commodity has brought war-like horrors to many, denying them a chance to secure the American Dream. Democracy is about maximizing access and involvement, learning better what makes the system work or not work through participation in it. But the costly and exclusive nature of education has restricted access and influence. And the streamlining of education to the job market has led to grade-inflation pressures and the dumbing-down of the curriculum, among other liabilities.

What then would credible reparations consist of? They would have to include all victims of the wars since the beginning, when market forces began to encroach on education; when privatization became all the rage to eviscerate the commons, public spaces and ownership, as a forum for democratic expression. Value attached to land and activity held in common and merely for use were deemed inferior to the value that accrued from making a profit on these very same entities. Milton Friedman proselytized these virtues.

Freedom lies in individuals and groups being able to perfect the profit-making power of the market to control all spaces and activity in society. The public and governmental structures left uncontrolled will tend to threaten this freedom. Therefore money should be withdrawn from public budgets because the value it represents is taken in the form of taxes from those who earned it through more genuinely-private initiatives in the exchanging of goods and services. The wealth of the whole will be maximized through the orchestration of individual and group wills that strive to succeed through the market.

The scramble after the spoils by these willful profiteers leaves many behind since there’s a structural limit to ownership. Resources for maximizing profit accrue to relatively few players; they can’t be extended to everyone in the society. And those who control it can dictate to the rest and appropriate its wealth. This means the government must step in as a player and clean up messes—“externalities”—the profiteers create from an imperfect market mechanism. Hence the need, for example, to legislate bankruptcy codes to stabilize the system. We’ve witnessed the effects of this necessary cleanup very recently with the emergence of the reality and concept of the “1%,” the survivors of this evolving privatization who have worked the system to their benefit but have left a lot of problems in their wake: low wage, temporary work with no benefits, and especially the underfunding of social programs and, most particularly, education.

The spread of privatization through society produces greater and greater inequality, thus raising the question of whose freedom flowers when individuals and groups exercise their will to maximize market power. This idea of the superiority of the private was pushed through a concerted effort by Friedman and the Chicago School well before the institutions were put in place to secure it, and the meaning of freedom for them was linked to a belief in inequality as natural. Freedom flowers for everyone but not to the same degree. The outcome of private initiative may well produce aggregate positives but it also leaves uneven pockets, negatives, these reversals and insufficiencies the blamed on the individual and group efforts not the market mechanism itself. This leads to contradictory notions of freedom.

As education developed its high price tag and became ever more severed from the public domain it reinforced this trend. Education is an institution that not only instructs, it socializes students in the values of the mainstream, like the family and the media. And while this is far from universal, pockets of alternatives certainly exist in departments and institutes of today’s colleges and universities, education helps to reproduce the system as it is. It delivers the commonsense that shapes our beliefs.

For some time neoliberalism has been the orthodoxy of choice in school systems, and not merely as a presence in the curriculum but in how they’re managed and function in the larger corporate order. To be most efficient, we’re told, they have to be run like a business, executing a model that meshes with the corporate hierarchy and its high administrative costs at the top versus the employees, pressures that effect tuition levels. This is especially evident when it comes to personnel issues. Schools have their own version of temping. Over half of the faculty in many departments are temporary and without benefits, their value helping to sustain high salaries at the top. Hence the increasing reliance on corporations for research support, strikingly evident in the UC system even before the post-2008 austerity-driven budgets.

The demographics of the institutions become advertisements for themselves. Fewer and fewer students of color or from the lower classes have a presence in the classrooms and over time this comes to be accepted as the way it should be, as a space mostly for the privileged. Within some elite universities now there’s a striking class divide with the very well-to-do students living in separate quarters, often off campus, and rarely mingling with the granted masses. They have special hyper-consumption gatherings and exotic spring breaks. And the book-consumer-goods-stores—commonly privatized entities these days—have special spaces for very high-end products (Jennifer Medina, “Student Life? It All Varies, By Income,” New York Times, 4/4/19).

A fair reparations solution will have to extricate the damage from the compounding of neoliberal power and return to a semblance of “free” in order to apportion blame and subsidize victims. The slavery analogy again: There will have to be a return to the conditions of the crime and a tally of the damages incurred from then until now. This will be a formidable task given the reproducing-power of the existing system, the type of obstruction that surely motivates Sanders’ call for fundamental change. In fact the analogy with “Medicare for All” is also appropriate. As Sanders claims, it will be necessary to extricate the excesses of private insurance-overhead to arrive at “free” universal health care. This will mean engaging with what “free” means.

Those heavily invested in the privatized education system as it is will argue that a return to “free” will amount to theft, a taking away from those who earn their living through the legal and legitimate route of the market. They will fight against these efforts like the medical industry has been doing for some time, especially since “Medicare For All” has gained traction, spending considerably to block change, arguing there’s no free lunch, someone has to pay.

Those heavily invested in the ideals of the “free” education movement will argue that the commercializing of education is the theft of value possessed in common by activists and that this movement was itself a counter to the imposition of unfair debts in the form of relegation to second class citizenship status. So getting back to a moment which was itself a throwback to a prior status quo when participatory democracy thrived is about syncing with fundamental American ideals upon which a price tag can’t be put. Education is one of those areas that should be protected from the market, like land preserves, medical care and even housing, because they affirm the quality of civilization, the species, and shouldn’t be quantified.

Political fixes that breed more political fixes will likely decide the fate of this argument, a trade-off between extremes. But if Sanders or Warren get the chance to fix a solution that pushes for reparations, as opposed to simply canceling select debts and making tuition free, they could seed the kind of change that will be very difficult to reverse for some time.

Finally, an irony. If we get back to a state of free education for all, will the occupational structure be upgraded to accommodate these aspiring citizens? If not, they will be able to use their free time as watchdogs to critically evaluate the direction of the Republic…

John O’Kane teaches writing at Chapman University. His recent book is Toward Election 2020: Cancel Culture, Censorship and Class