>>> AND PRESIDENT BIDEN RECENTLY

ANNOUNCED STUDENT LOAN DEBT

RELIEF FOR MILLIONS OF

AMERICANS.

A GAME CHANGER SOME SAID.

TOO LITTLE SAY OTHERS.

BUT HOW DID AMERICAN STUDENTS

BECOME SO BURDENED WITH DEBT IN

THE FIRST PLACE?

JOSH MITCHELL IS A REPORTER FOR

"THE WALL STREET JOURNAL."

HIS NEW BOOK "THE DEBT TRAP"

TRACES THE ROOTS AND EXPLOSIVE

GROWTH OF $1.7 TRILLION STUDENT

DEBT IN THE UNITED STATE AND

TELLS US WHY HE THINKS A LOT

MORE NEEDS TO BE DONE BREAK THE

CYCLE.

THIS CONVERSATION IS PART OF OUR

ONGOING INITIATIVE ABOUT

POVERTY, JOBS, ECONOMIC

OPPORTUNITY, AND JUSTICE IN

AMERICA CALLED "CHASING THE

DREAM."

>> JOSH MITCHELL THANKS SO MUCH

FOR JOINING US.

FIRST THE WORD CATASTROPHE IS A

STRONG WORD.

YOU DON'T PULL ANY PUNCHES IN

THIS BOOK.

YOU HAVE USED PHRASES LIKE

PREDATORY LENDING, CRONYISM, LAY

OUT THE PROBLEM AS YOU STARTED

TO SEE IT AS YOU'VE BEEN

INVESTIGATING STUDENT LOANS.

>> THERE ARE SEVERAL BIG

PROBLEMS.

ONE IS JUST HOW EXPENSIVE HIGHER

EDUCATION IS.

IF YOU LOOK AT HOW QUICKLY

COLLEGES HAVE RAISED THEIR

PRICES IT IS TRIPLE THE RATE OF

INFLATION OVER THE PAST 20 YEARS

OR ACTUALLY THE PAST 40 YEARS.

IT HASN'T STOPPED.

IT SLOWED IN RECENT YEARS BUT IT

HAS GONE TO SUCH A TREMENDOUS

LEVEL THAT IT NOW REQUIRES

PEOPLE TO TAKE ON TENS OF

THOUSANDS OF DOLLARS IN DEBT

JUST TO GO TO COLLEGE.

IF YOU LOOK AT THE AMOUNT OF

PEOPLE THAT WERE DEFAULTING ON

THEIR LOANS, IT WAS ABOUT ONE IN

FIVE PRIOR TO THE PANDEMIC WHAT

STUDENT LOANS WERE THREE MONTHS

BEHIND ON THEIR LOANS.

8 MILLION PEOPLE DEFAULTED ON

THEIR LOANS MEANING THEY HAD

GONE AT LEAST A YEAR WITHOUT A

PAYMENT.

THAT IS ABOUT THE SAME AMOUNT OF

PEOPLE WHO LOST THEIR HOMES TO

FORECLOSURE IN THE HOUSING CRASH

AND WE CALLED THAT A CRISIS.

SO IF YOU JUST LOOK AT ALL OF

THESE DIFFERENT THINGS, THE

PRICE, HOW MANY PEOPLE ARE

UNABLE TO PAY THEIR LOANS, I

THINK IT'S PRETTY ACCURATE TO

CALL IT A CRISIS.

>> 1.6, $1.7 TRILLION.

THAT'S A NUMBER THAT'S

IMPOSSIBLE FOR MOST PEOPLE TO

EVEN VISUALIZE.

PUT THAT IN PERSPECTIVE.

THIS IS THE AMOUNT OF

OUTSTANDING DEBT THAT EXISTS OUT

THERE.

>> THIS IS BASICALLY THE HIGHEST

FORM OF HOUSEHOLD DEBT OUTSIDE

OF MORTGAGES ABOUT THE SIZE OF

CANADA'S ECONOMY.

THAT IS HOW BIG IT IS.

THIS HAPPENED VERY QUICKLY.

AS OF 2007, LATE 2007 THERE WAS

ABOUT HALF OF A TRILLION DOLLARS

IN STUDENT DEBT.

BY 2013 IT WAS HIGHER.

WHEN UNEMPLOYMENT SKYROCKETED,

PEOPLE ENROLLED IN DROVES IN

COLLEGE AND GRAD SCHOOL TO

ESCAPE THE WEAK LABOR MARKET AND

VERY QUICKLY OVERNIGHT PEOPLE

TOOK ON A LOT OF DEBT THINKING

THEY WERE MAKING AN INVESTMENT

IN THEIR FUTURE AND FOR A LOT OF

PEOPLE THAT INVESTMENT HAS NOT

PAID OFF.

>> WHEN YOU THINK OF THE NUMBER

OF PEOPLE WHO HAVE OUTSTANDING

DEBT GIVE US A PICTURE IF YOU

CAN JUST ON HOW MANY PEOPLE HAVE

FOR EXAMPLE A HUNDRED THOUSAND

DOLLARS OR $200,000 IN LOANS AND

WHAT IS THE LIKELIHOOD

PERCENTAGE WISE OF THESE PEOPLE

THAT ARE GOING TO DEFAULT?

>> THERE'S ABOUT 43 MILLION

PEOPLE IN TOTAL WHO HAVE STUDENT

LOANS.

THE AVERAGE COMING OUT OF

COLLEGE IF YOU SPEND FOUR YEARS

IS ABOUT $30,000.

MANY PEOPLE IN GRADUATE SCHOOL,

THOSE ARE THE ONES WHERE YOU SEE

PEOPLE TAKING OUT $50,000,

$100,000 IN SOME CASES $200,000.

ACTUALLY WROTE ABOUT ONE STUDENT

WITH A MILLION DOLLARS OF

STUDENT DEBT WHO WENT TO USV TO

BECOME AN ORTHODONTIST.

PEOPLE WITH BIG STUDENT LOANS

ARE STILL A MINORITY.

THEY ARE A SLICE.

BUT THEY ARE A GROWING ONE.

THERE ARE SEVERAL PEOPLE WITH

THOSE BIG STUDENT -- WHO HAVE

THAT MUCH STUDENT DEBT.

THAT IS ONE OF THE THINGS I HEAR

A LOT IS PEOPLE SAY, LOOK.

THE AVERAGE STUDENT DEBT IS ONLY

30,000.

WHY SHOULD WE WORRY ABOUT THIS?

BUT THERE'S A LOT OF VARIATION

UNDER THE AVERAGE.

I THINK THE AVERAGE OBSCURES A

LOT OF THE PROBLEM AREAS.

>> THE BIDEN ADMINISTRATION HAS

LAUNCHED A FORGIVENESS PLAN.

THEY SAID ESSENTIALLY THEY'LL

HAND BACK ABOUT $20,000 IF YOU

DID QUALIFY FOR A PELL GRANT AND

$10,000 IF YOU DID NOT.

WHAT WENT THROUGH YOUR MIND WHEN

YOU HEARD ABOUT IT?

>> THERE WERE THREE THINGS THAT

WENT THROUGH MY MIND.

SO I THINK IT'S VERY

QUESTIONABLE WHETHER WHAT THE

PRESIDENT HAS DONE HERE IS

CONSTITUTIONAL AND WE'RE ALREADY

SEEING REPUBLICANS TALK ABOUT

WHETHER THEY'RE GOING TO

CHALLENGE THIS IN COURT.

IT LOOKS LIKE THEY ARE.

BUT PRESIDENT BIDEN HIMSELF AS

WELL AS DEMOCRATS IN CONGRESS

SAID LAST YEAR, THAT THEY HAD

SERIOUS DOUBTS ABOUT WHETHER THE

PRESIDENT HAD THE AUTHORITY TO

CANCEL STUDENT DEBT WHOLESALE

WITHOUT APPROVAL FROM CONGRESS.

AND SO AFTER BIDEN, AFTER

PRESIDENT BIDEN SPENT MONTHS

URGING CEONGRESS TO PASS A LAW E

COULD SIGN THEY DID NOT DO SO,

SO HE HAS GONE AHEAD AND SAID HE

WOULD CANCEL STUDENT DEBT FOR

PEOPLE WHO MAKE UNDER $125,000,

$250,000 PER HOUSEHOLD.

SO THERE IS A QUESTION OF

WHETHER THIS IS GOING TO STICK.

AND ULTIMATELY IT COULD END UP

IN THE SUPREME COURT.

IF THIS IS A CONSERVATIVE COURT

WE'LL HAVE TO SEE WHAT HAPPENS

THERE.

BUT I DON'T THINK WE SHOULD

FORECLOSE THE POSSIBILITY THIS

DOES NOT STICK.

THAT IS NUMBER ONE.

NUMBER TWO, ASIDE FROM WHETHER

THIS IS CONSTITUTIONAL, I DON'T

THINK PEOPLE REALIZE A LOT OF

PEOPLE IN THE PUBLIC DISCOURSE

REALIZE HOW MUCH TOXIC DEBT IS

OUT THERE.

HOW MANY LOANS WERE JUST NOT

GOING TO GET REPAID.

IF YOU LOOK AT THE NUMBER OF

PEOPLE WHO HAD SUB PRIME CREDIT

SCORES WHEN THEY TOOK OUT

STUDENT LOANS, IT WAS A VERY

HIGH SHARE OF PEOPLE.

I ASKED A PRIVATE BANK TO GIVE

ME THE NUMBERS.

IT WAS A VERY HIGH SHARE, ABOUT

TWICE THE LEVEL OF PEOPLE WHO

TOOK ON SUB, WHO WERE SUB PRIME

IN THE HOUSING MARKET.

POINT BEING THAT THERE WAS A LOT

OF BAD DEBT ON THE BOOKS THAT

WAS NOT KBGOING TO GET REPAID.

I THINK THIS WAS AN

ACKNOWLEDGMENT.

IF THIS WERE A PRIVATE BANK THEY

WOULD HAVE WRITTEN DOWN THE

STEP.

THEY WOULD HAVE ALREADY DONE

THAT.

THE THIRD POINT IS WHAT IS THE

BIDEN ADMINISTRATION DOING TO

PREVENT ANOTHER RUN UP IN

STUDENT DEBT?

AND I'M VERY SURPRISED THAT

THEY'RE NOT REALLY PAIRING THIS

WITH BROADER CHANGES TO THE

PROGRAM BECAUSE WITHOUT ANY

CHANGES WE'RE GOING TO SEE

ANOTHER RUN UP IN STUDENT DEBT

IN THE NEXT FEW YEARS.

>> ONE OF THE CRITIQUES OF THE

BIDEN PLAN FROM ECONOMISTS IS

THIS IS REGRESSIVE AND ACTUALLY

PENALIZING PEOPLE MORE

IMPOVERISHED WHICH MIGHT SEEM

COUNTER TO WHAT IT IS TRYING TO

DO AND THAT IT IS GIVING A LEG

UP TO PEOPLE WHO ALREADY HAVE

MORE MONEY AND MIGHT ALREADY BE

ON THEIR WAY TO A COMFORTABLE

LIFE WHERE THEY CAN PAY THESE

LOANS OFF.

IS THERE ANY MODIFICATION THAT

CAN HAPPEN TO THIS PLAN?

>> THERE IS RESEARCH TO SHOW

THAT, YOU KNOW, EVEN WITH THIS

PLAN IT IS GOING TO GO TO HIGHER

INCOME WORKERS.

BUT REALLY THESE ARE NOT -- A

LOT OF THEM ARE NOT WEALTHY

WORKERS.

THIS IS FOR PEOPLE EARNING UNDER

$125,000.

SOME HOUSEHOLDS $250,000.

AGAIN, ONE OF THE POINTS THAT I

MAKE THOUGH, AND I THINK THIS IS

VERY IMPORTANT, IS THAT EVEN IF

SOME OF THESE BENEFITS ARE

SKEWED, THERE IS A HUGE COHORT

OF PEOPLE THAT ARE JUST NOT

PAYING DOWN THEIR LOANS.

WE'RE TALKING ABOUT MILLIONS OF

PEOPLE WHO AGAIN WENT TO

COMMUNITY COLLEGE, WENT TO A FOR

PROFIT PROGRAM, AND THEY DROPPED

OUT OR EVEN IF THEY GRADUATED

THE PROGRAM THEY DID NOT GET THE

HIGH PAYING JOBS THEY THOUGHT

THEY WERE GOING TO GET.

AND THAT DEBT IS JUST SITTING

THERE.

SO I THINK THIS IS GOING TO, YOU

KNOW, WIPE OUT A BIG CHUNK OF

THAT DEBT THAT PROBABLY WAS NOT

GOING TO GET REPAID.

SO, YES.

ON AVERAGE, YOU KNOW, WORKERS

WHO GO TO COLLEGE AND WHO

ACTUALLY LEAVE COLLEGE AND

GET -- WILL GET A DECENT JOB BUT

THERE IS A HUGE COHORT THAT

AREN'T.

>> I DIDN'T REALIZE HOW MUCH OF

THIS STEMMED FROM REALLY KIND OF

A -- THE SPACE RACE AND THE COLD

WAR AND HOW AMERICA FELT LIKE WE

NEEDED TO MAKE THESE INVESTMENTS

TO BE COMPETITIVE ON THE WORLD

STAGE.

AND THAT'S WELL INTENTIONED.

WE ALSO MADE INVESTMENTS SAYING

WE WANT TO TRY TO GET AS MANY OF

OUR PEOPLE EDUCATED AS POSSIBLE.

AGAIN, NOBLE INTERESTS.

RIGHT?

>> YEAH.

ONE OF THE THINGS THAT I DON'T

THINK CONGRESS OR SOCIETY EVER

REALLY DECIDED EARLY ON WAS

SHOULD EVERYONE GO TO COLLEGE

AFTER THE USSR LAUNCHED SPUTNIK.

BASICALLY CONGRESS CREATED THE

FIRST STUDENT LOAN PROGRAM AND

THE IDEA IN GENERAL WAS TO HAVE

SCHOOLS GRADUATE MORE SCIENTISTS

AND ENGINEERS SO WE COULD

RECLAIM THE SPACE RACE.

IT WAS REALLY ABOUT S.T.E.M.,

SCIENCE AND TECH.

BUT THEN VERY QUICKLY WHEN LBJ

ENTERS OFFICE HE TAKES ON THIS

IDEA THAT HE WANTS TO REALLY

HELP AMERICANS, HE WANTS TO

LEVEL THE PLAYING FIELD AND

SOLVE INEQUALITY OR AT LEAST

REDUCE INEQUALITY AND GIVE

EVERYONE AN OPPORTUNITY TO GO TO

COLLEGE.

THAT IS WHEN REALLY HIGHER

EDUCATION AND COLLEGE SORT OF

BECAME KNOWN AS THIS ENTITLEMENT

PROGRAM EVERYONE SHOULD HAVE

ACCESS TO.

BUT EVEN HE BACK THEN, YOU KNOW,

WOULD SAY THINGS LIKE THIS IS

FOR PEOPLE WHO ARE ABLE TO GO TO

COLLEGE.

THIS IS FOR PEOPLE WHO HAVE THE

ACADEMIC ABILITY TO SUCCEED IN

COLLEGE.

IT WAS NEVER REALLY DEFINED WHAT

THAT MEANT.

VERY QUICKLY AS THE ECONOMY

CHANGES, OVER THE NEXT 40 YEARS,

YOU KNOW, AND AS WE SEE THE

DECLINE IN MANUFACTURING JOBS,

AS WE SEE THE RISE IN TECHNOLOGY

AND THE COMPUTER AGE, MORE AND

MORE PEOPLE, MORE AND MORE JOBS

REQUIRED PEOPLE TO GO TO

COLLEGE.

BUT AGAIN, WE'VE NEVER REALLY

DECIDED WHETHER IT IS FOR

EVERYONE, WHETHER YOU ACTUALLY

NEED TO GO TO COLLEGE TO GET

EVERY SINGLE JOB.

ONE OF THE THINGS WE'VE SEEN

OVER THE PAST FEW YEARS FOR

EXAMPLE IS THE COLLEGE WAGE

PREMIUM HAS GONE DOWN.

EMPLOYERS ARE DROPPING THE

REQUIREMENTS TO GO TO COLLEGE

BECAUSE THE LABOR MARKET IS SO

TIGHT WHICH MAKES YOU THINK,

OKAY.

IF THEY'RE DROPPING THOSE

REQUIREMENTS NOW WHY DIDN'T THEY

DO THIS, YOU KNOW, PRIOR TO THE

PANDEMIC?

>> LET'S TALK A LITTLE BIT ABOUT

KIND OF THE INDUSTRY YOU LOOK AT

HERE.

WHEN YOU'RE TALKING ABOUT

RUNNING UP STUDENT DEBT PART OF

THAT IS BECAUSE THE PRICE OF

TUITION KEEPS GOING UP.

YOU CONNECT THE DOTS SO TO SPEAK

BETWEEN MONEY FROM THE TREASURY,

CONGRESS, A COMPANY CALLED SALLY

MAE WHICH OUR OVERSEAS AUDIENCE

MIGHT NOT KNOW ABOUT AND BANKS

AND UNIVERSITIES.

KIND OF PAINT THAT DIAGRAM FOR

US IF YOU CAN.

>> YEAH.

SO PRIOR TO 2010 MOST STUDENT

LOANS WERE MADE BY PRIVATE BANKS

AND CONGRESS WOULD GUARANTEE THE

LOANS.

SO IT WAS A FEDERAL LOAN BUT

BASICALLY TAXPAYERS STOOD BEHIND

THESE LOANS.

AND THIS WAS A WAY FOR CONGRESS

TO PRETEND LIKE THIS PROGRAM

WOULDN'T COST TAXPAYERS

ANYTHING.

IT WAS A WAY TO KEEP A LOT OF

THESE COSTS OFF THE BOOKS.

THE PROGRAM WAS ESSENTIALLY ON

THE BANKS' BOOKS.

CONGRESS PAID BANKS FEES TO

ENSURE THAT THIS, THAT IT STAYED

ON THEIR BOOKS.

MEANWHILE, WHEN THE STUDENTS

FAILED TO REPAY CONGRESS WOULD

COME BACK AND REIMBURSE THE

BANKS.

FOR MANY YEARS THIS WAS A VERY

PROFITABLE PROGRAM FOR THE

PRIVATE SECTOR AND FOR WALL

STREET.

AND IF YOU LOOK AT FOR EXAMPLE

FOR PROFIT SCHOOLS, MANY OF

WHICH WERE PUBLICLY TRADED

COMPANIES, AND STILL ARE, ON

WALL STREET, THEIR BIGGEST

SOURCE OF MONEY WAS THE STUDENT

LOAN PROGRAM.

CONGRESS WOULD GIVE STUDENTS

BLANK CHECKS.

STUDENTS WOULD USE THOSE CHECKS

TO GO TO A LOT OF FOR PROFIT

SCHOOLS.

AND THOSE SCHOOLS, WHETHER IT

WAS FOR PROFIT SCHOOLS OR

NONPROFIT SCHOOLS, KEPT THE

MONEY REGARDLESS OF THE ABILITY

OF STUDENTS TO REPAY.

THIS IS A PROGRAM WITH THE MOST

PER VEERS INCENTIVES YOU CAN

THINK OF.

THAT IS WHY STUDENT DEBT ROSE SO

QUICKLY BECAUSE EVEN WHEN

STUDENTS COULDN'T REPAY SCHOOLS

KNEW THEY COULD CONTINUE TO

CHARGE HIGH PRICES REGARDLESS OF

THE OUTCOME.

>> THERE IS DATA THAT SHOWS A

MAN THAT GRADUATES COLLEGE IS

LIKELY TO EARN SOMEWHERE AROUND

$900,000 MORE THAN HIS

COUNTERPART WHO DIDN'T GO

THROUGH COLLEGE AND A WOMAN

MAYBE $600,000 MORE.

>> THERE HAS BEEN WHAT YOU ARE

REFERRING TO AS THE COLLEGE WAGE

PREMIUM.

THIS REALLY OPENED UP IN THE

'80s.

I GREW UP AROUND THAT TIME.

IT WAS DRILLED IN MY HEAD AS

WELL AS EVERYONE'S HEAD THAT IF

YOU WANTED TO MAKE SOMETHING OF

YOURSELF YOU HAD TO GO TO

COLLEGE.

THEN FOR A LOT OF PEOPLE IT

BECAME GRAD SCHOOL IN THE 2000s.

AND SO YES.

THERE IS A PREMIUM.

BUT THERE ARE SO MANY PEOPLE

OUTSIDE OF THE AVERAGE WHO ARE

DEFAULTING.

THERE IS A HIGH LEVEL OF PEOPLE

WHO DROP OUT OF COLLEGE.

AND SO THEY END UP WITH STUDENT

DEBT BUT THEY DON'T HAVE THE

COLLEGE DIPLOMA THAT THEY NEED

TO GET A LOT OF JOBS.

AND SO, YOU KNOW, IT IS SOMEWHAT

COUNTER INTUITIVE BUT MOST

PEOPLE WHO DEFAULT ON THEIR

LOANS ACTUALLY OWE BETWEEN

$5,000.10,$000 IN STUDENT DEBT

AND AGAIN THAT IS BECAUSE A LOT

OF PEOPLE ONLY LAST A YEAR AND

THEN THEY DROP OUT.

YOU KNOW, WHEN YOU GO TO APPLY

FOR A HOME LOAN YOU HAVE TO GET

AN APPRAISAL FOR THAT LOAN.

THE BANK REQUIRES YOU TO GET AN

APPRAISAL FOR THAT LOAN TO MAKE

SURE YOU ARE NOT OVER PAYING FOR

THE HOME BECAUSE THE BANK, YOU

KNOW, WANTS TO MAKE SURE THAT

YOU'RE GOING TO BE ABLE TO PAY

THAT BACK AND THE INVESTMENT YOU

ARE MAKING IS ACTUALLY WORTH IT.

THERE IS NO SIMILAR APPRAISAL

PROCESS WHEN STUDENTS GO TO

COLLEGE.

THEY GO TO THE FINANCIAL AID

OFFICER OF THEIR COLLEGE.

THEY SAY I WANT TO GO HERE.

THEY'RE 18 YEARS OLD.

THEY HAVEN'T REALLY HAD ANY

EXPERIENCE WITH TAKING OUT A

LOAN OF ANY SORT.

AND THEY'RE JUST TOLD THIS IS

WHAT THEY NEED TO DO IN ORDER TO

GET A GOOD JOB.

AND SO THEN THEY COME OUT AND

THEY REALIZE QUICKLY THEIR LOANS

ARE TOO BIG TO STAY ON TOP OF

THE MONTHLY PAYMENT AND THEY END

UP DEFAULTING ON THEIR LOANS.

>> AS YOU'VE RESEARCHED THIS

SPACE, WHAT ARE THE THINGS THAT

BOTH POLITICIANS AND ECONOMISTS

AND STUDENTS AND ADMINISTRATORS

CAN AGREE ON TO TRY TO FIX THIS?

>> ONE OF THE MAIN POINTS I

ARGUE IN MY BOOK IS IF YOU WANT

TO FIX THE SYSTEM, THERE'S GOT

TO BE CONSEQUENCES FOR SCHOOLS

IF THEY'RE GOING TO SADDLE

STUDENTS WITH DEBT THAT THEY

SIMPLY CAN'T REPAY.

AND THIS IS WHAT I MEANT BY THE

LACK OF SYSTEMIC REFORM THAT THE

BIDEN ADMINISTRATION HAS PAIRED

WITH THIS FORGIVENESS PROGRAM.

ONE OF THE PROVISIONS OF THIS

PLAN OF HIS, IS IF YOU TAKE ON

COLLEGE DEBT YOU WILL -- YOUR

MONTHLY PAYMENT WILL BE CUT IN

HALF COMPARED TO WHAT YOU

CURRENTLY HAVE TO PAY.

BASICALLY IT'S 5% OF YOUR

DISCRETIONARY INCOME THAT YOU

HAVE TO PAY EACH MONTH TOWARD

YOUR UNDER GRADUATES LOANS UNDER

HIS PLAN.

THAT WILL HELP STUDENTS STAY ON

TOP OF THEIR LOANS.

BUT IT IS A BIG GIFT TO THE

SCHOOLS BECAUSE NOW SCHOOLS CAN

INCREASINGLY GO TO THE STUDENTS

AND SAY DON'T WORRY ABOUT THE

BALANCE.

DON'T WORRY ABOUT HOW MUCH

STUDENT DEBT YOU HAVE TO TAKE ON

TO ATTEND THIS SCHOOL BECAUSE

YOU'RE ONLY GOING TO HAVE TO PAY

FIVE PERCENT OF YOUR INCOME

REGARDLESS OF WHETHER YOU OWE,

YOU KNOW, $10,000 OR A HUNDRED

THOUSAND DOLLARS.

I THINK THERE IS A VERY BIG RISK

HERE THAT THIS IS GOING TO

FURTHER INCENTIVIZE SCHOOLS TO

JUST RAISE THEIR PRICES.

SO I THINK ONE OF THE THINGS

THAT BOTH PARTIES COULD AGREE

ON, AND THEY BOTH SAID THIS,

MEMBERS OF BOTH PARTIES, THAT

SCHOOLS NEED MORE SKIN IN THE

GAME.

NOW, HOW DO YOU DO THAT IS THE

BIG QUESTION.

AND A LOT OF POLITICIANS TALK

ABOUT THAT.

BUT THEY HAVE NOT, YOU KNOW, PUT

FORWARD A REAL PLAN.

ONE OF THE THINGS THAT I POINT

OUT IN MY BOOK IS THAT BEFORE

THE GOVERNMENT GOT INTO THE

BUSINESS OF STUDENT LOANS, A LOT

OF SCHOOLS THEMSELVES ACTUALLY

MADE LOANS THEMSELVES TO

STUDENTS.

THE DEFAULT RATES WERE VERY LOW

AND I WOULD ARGUE THE REASON IS

THAT THE SCHOOLS KNEW IF THEY

WERE SETTING UP STUDENTS TO FAIL

THE SCHOOLS WOULD TAKE ON THOSE

LOSSES.

THEY WOULD LOSE MONEY.

AND SO I WOULD ARGUE THAT IF YOU

REALLY WANT TO CHANGE THE SYSTEM

YOU HAVE TO CHANGE THE

INCENTIVES SO SCHOOLS ARE

RESPONSIBLE FOR SOME OF THE

LOSSES IF STUDENTS DEFAULT ON

THEIR LOANS.

CURRENTLY THEY REALLY AREN'T.

>> WHAT ABOUT THE STUDENTS THAT

NEED TO BORROW THIS FALL?

WHAT SHOULD THEY BE DOING?

SHOULD THEY BE FACTORING IN THAT

SOME DEBT MIGHT BE FORGIVEN?

BECAUSE UNIVERSITIES ARE AS YOU

SAID LIKELY TO SAY, HEY.

THERE IS A DEBT FORGIVENESS PLAN

ON THE TABLE.

WHETHER IT IS PASSED OR NOT,

CONSTITUTIONAL OR NOT, I PUT IT

IN MY BROCHURE AND JACK UP MY

PRICES PERHAPS.

>> YEAH.

I THINK THAT IS A BIG ISSUE

HERE.

YOU KNOW, PRESIDENT BIDEN HAS

OPENED UP A CAN OF WORMS I THINK

IN TERMS OF NOT JUST WITH

FORGIVING $10,000 BUT THEY'VE

ALSO, AND IT WASN'T JUST HIM.

IT STARTED WITH TRUMP WHERE THEY

PUT IN PLACE THIS PANDEMIC

PAUSE.

THAT HAS LASTED ALMOST THREE

YEARS.

PRESIDENT BIDEN HAS EXTENDED

THAT TO THE END OF THIS YEAR.

SO IT WILL HAVE BEEN THREE YEARS

WHERE PEOPLE HAVE NOT MADE A

PAYMENT ON THEIR STUDENT LOANS.

AND RIGHT NOW, YOU KNOW,

INFLATION IS VERY HIGH.

SO THERE ARE PROBLEMS OUT THERE.

BUT THE LABOR MARKET IS VERY

HOT.

AND PEOPLE, UNEMPLOYMENT IS VERY

LOW.

AND SO THERE IS A BIG QUESTION

OF, OKAY.

WHAT HAPPENS THE NEXT TIME THERE

IS AN ECONOMIC DOWNTURN?

HOW QUICKLY IS THE

ADMINISTRATION GOING TO JUST

TURN THE TAPS OFF AGAIN AND NOT

REQUIRE TO PAY OFF THEIR STUDENT

LOANS?

SO I DO THINK THERE IS AN ISSUE

HERE OF WHETHER STUDENTS ARE

BECOMING MORE AND MORE

DESENSITIZED TO PAYING DOWN

THEIR LOANS.

I THINK IT'S -- I THINK THE GOOD

THING ABOUT THAT IS THAT

STUDENTS ARE NOT GOING TO

DEFAULT ON THEIR LOANS.

BUT I THINK THERE IS THIS BIGGER

ISSUE THAT NO ONE IS REALLY

ADDRESSING WHICH IS IT COULD

FURTHER ENCOURAGE STUDENT --

SCHOOLS TO RAISE THEIR PRICES

AND ULTIMATELY TAXPAYERS WILL

HAVE TO TAKE ON THOSE COSTS.

>> JOSH MITCHELL THE BOOK IS

CALLED "THE DEBT TRAP, HOW

STUDENT LOANS BECAME A NATIONAL

CATASTROPHE."

THANK YOU VERY MUCH FOR JOINING

US.

>> SURE.

THANK YOU.