They believed so much that when a degree wasn’t enough to pay off the debt, millions of people went into more debt to get more degrees. Reasonable people made decisions based on the information available at the time and all information from reliable sources pointed to “borrow”.
If you didn’t want to borrow, the cost of education narrowed your practical choices. You could go to community college, join the military, be born into a wealthy family, or not go to school at all. No matter your personal feelings about any of these choices, there were plenty of social norms about their relative value. We despise community college education as unsuited to the type of high-paying, white-collar work that accompanies the prestige of our economy. And, in case you haven’t noticed, the United States was engaged in a military conflict somewhere in the world for much of these students’ lives. That left two choices, only one practical: not to go to university at all. But the incentives to go there are too many to make it a good choice for most people. This created a perverse set of incentives.
You can be forgiven for not knowing that the “going to college” refrain would have a darker side. But we should not forgive those who knew better. Decision makers knew in the 2010s that the train was derailed. For-profit colleges preyed on women like those who might have ended up at Bennett College. As sociologist Louise Seamster told me on “The Ezra Klein Show,” they knew black debtors would probably never earn enough to pay off their college debt. They knew poor immigrant and black and first-generation Hispanic students looked to their aging parents and grandparents to co-sign loans. We knew Social Security checks would eventually be garnished, throwing thousands of seniors into the very poverty the program was supposed to prevent.
We knew that some people racked up six-figure debt for high-end law firms or medical jobs, but those with more than $200,000 in debt accounted for 2% of all borrowers. We knew we had encouraged bad actors in the student loan servicing market. We knew student loan debt cost families the most with the most to lose. And we’ve continued to offer the loans with the same joyful promise: it’s worth it.
When you get scammed by a friend, it’s a shame. When your country scams you, it’s a fraud.
Those who warn ‘go small and slow’ on debt forgiveness – that they don’t rely on student loans because they were rich or went to college when you could pay tuition by working part-time – sound like people who make higher education policy who are wary of forgiveness because it smacks of government handouts. Their impulse is to tinker around the edges of quicksand drowning out many of their main constituents. Or, in their greatest generosity, they will consider meager, means-tested debt forgiveness.
Means testing is a way to measure merit and it’s not the right ax for that pile of wood. First, it’s a bureaucratic mess, if that’s even possible. The IRS and the Department of Education seem unable to coordinate income verification to qualify those who pass the means test. There is also the matter of the means test which functions as regressive. Social science has shown that means testing is a barrier for those who need help the most. If you want to help working-class people in debt, make it easy to cancel.
Means testing is also the wrong solution to this problem. The student debt crisis we created is a recent invention. We don’t forgive debt because it makes us feel bad. We forgive this debt because, as it is designed, it negates the value of education. This debt crisis is the result of a predictable set of market forces and political decisions. Every student who went into debt under these conditions did so under circumstances that did not allow for better choices. No one, not even graduates who are now earning big bucks, deserved ratings as bad as the ones we created.