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Diane Lincoln Estes
Diane Lincoln Estes
As Washington debates how to provide economic aid during the pandemic, many say one critical component should be part of future deals: forgiving student debt. But determining how much could or should be forgiven is a complicated question. Paul Solman looks at the pressure to make changes for our series, "Making Sense."
As Washington debates how to provide economic aid during the pandemic, many say one critical component should be part of future deals: forgiving student debt.
But determining how much could or should be forgiven is a complicated question.
Paul Solman looks at the pressure to make changes for our series Making Sense.
Scott Rennie earned a bachelor's and a master's degree. He's been paying ever since.
In 2006, I had $80,000 of student loan debt. It's 2021. I have never missed a student loan payment. My credit is over 800. And I still owe $68,000.
A dozen years after graduation, Sy'iyda Shabazz is even deeper in the hole.
I have upwards of $100,000 in debt at this point.
Just two of the almost 45 million Americans saddled with student loan debt, $1.7 trillion worth, more than double what's owed on credit cards, with an average load of $28,000.
We shouldn't have to take out so much money to fund an education. My generation, as millennials and the generation before and generations after us, we were told that the only way to get ahead and to make a name for ourselves and to have a life was to go to college.
Last March, Congress put a freeze on student loan payments, extended by President Trump to December and President Biden through next fall.
But some Democrats in Congress are pushing for $50,000 in permanent relief, among them, Senator Elizabeth Warren:
Sen. Elizabeth Warren:
Canceling student loan debt is the single most effective executive action that President Biden can take to kick-start this economy.
President Biden, however, supports a lower amount.
Pres. Joe Biden:
I'm prepared to write off the $10,000 debt, but not $50,000.
Scott Rennie's four-year and advanced degrees in environmental education earned him a pittance.
I have never been able to find a full-time job with my master's degree in my field. I have never had it in 15 years.
He's led nature tours, taught English in China, making sure students knew how to compliment their teacher.
One, two, three.
And he made music.
His job now? Handyman. Last year, he earned about $27,000.
So, with my advanced degree, I go to people's houses and I fix things for them. It's very honest work, but it's not what I went to school for. It's not what I want to be doing. It's what I — it's what I can do to survive.
Rennie thought he had scrounged up enough to buy land on which to run student outdoor programs on, but:
Despite having 30 percent down, despite having a credit score over 800, my bank and two other lenders said no. And they said no to me because of my student loan debt, because of my debt-to-income ratio.
And that was the point where I decided, no more;. I'm done.
We're overeducated and undercapitalized. I have forgotten what it's like not to be poor.
Rennie is part of a protest organized by the Debt Collective.
Have no fear, Debt Collective is here. I'm Debt Mom.
Rennie and fellow travelers like Debt Mom have pledged to stop paying, period. They're part of a group founded a decade ago during Occupy Wall Street.
Freelance writer Shabazz shares a 450-square-foot apartment with her 7-year-old son and her partner, who's unemployed and also has student debt.
Where are you talking to me from?
I am in my bathroom. Thanks to the pandemic, my son is home all the time, and so this is the only quiet place I can do interviews.
Shabazz can't afford anything bigger. Since graduating into the recession of 2008-2009, she's only had low-wage jobs.
All of my money goes to just keeping a roof over our heads, making sure my son has everything that he needs as he grows.
But not paying off her student loans means they're still accruing interest. The exact total now? She doesn't know.
At this point, I have stopped looking because I know there's nothing I can do about it, and I already have enough anxiety over it, that, if I knew, I would just have even more anxiety over it.
Policy professor Naomi Zewde argues that debt is penalizing Shabazz, and millions like her, for going to college.
It's the federal government that holds the vast majority of the student loan debt. It reaches into people's bank accounts every month, taking a median $200, on average, $400.
But the people who took on the debt took it on knowingly, willingly.
Yes, this is true, largely because an education is kind of necessary to succeeding in the society that we have built.
Two-thirds of student debtors are women, who also face a gender wage gap that makes it harder to pay off their loans. And, says Zewde, Black grads owe more than their white classmates. Twelve years after graduation, almost half owe more than they'd borrowed.
People who tend to owe this debt are people who have generational disadvantage. They're going to carry the greatest burden. It creates a modern-day sharecropper, when your income has to be allocated to paying your previous debts forever.
There is another side to this, however. The biggest beneficiaries of student debt forgiveness would be relatively higher earners.
Economist Constantine Yannelis:
People who go to college end up earning more than those who don't go to college. People who end up going to graduate or professional school earn more than people who just got a bachelor's degree.
So, people who borrow more tend to earn more.
And save more, and do less to boost the economy.
If we gave more of that money to very poor people, say, high school dropouts, they're much more likely to spend that money than doctors and lawyers and other high-income people.
Yannelis thinks that income-driven repayment plans better target borrowers who need the help.
These are plans in which borrowers pay 10 or 15 percent of their income above 150 percent of the poverty line. And then, after 20 or 25 years, depending on the specific type of plan, remaining debt gets forgiven.
But how about students who attended for-profit schools? They have taken on an average $39,000 in debt, and nearly half default within 12 years. Pre-pandemic, New York University's Sabrina Howell described their plight.
Lower graduation rates, lower loan repayment rates, and it's important to note that federally guaranteed student loans are not discharged in bankruptcy. And so wages can be garnished indefinitely if the student doesn't repay.
So, for them, and for Sa'iyda Shabazz, at least, the $10,000 in student debt forgiveness promoted by President Biden wouldn't do much.
That would not even scratch the surface for me.
Nor would it stifle Scott Rennie's protest.
That's not good enough. Thanks, Joe. Thanks, Mr. President. But that's not enough. We need full cancellation of this debt.
Which is — and please forgive us for so obviously writing to our footage — the song Scott Rennie and his friends promise to keep singing for quite awhile.
For the "PBS NewsHour," Paul Solman.
Watch the Full Episode
Paul Solman has been a business, economics and occasional art correspondent for the PBS NewsHour since 1985.
Diane Lincoln Estes is a producer at PBS NewsHour, where she works on economics stories for Making Sen$e.
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