indentured students

Indentured Student

Politicians from both parties might perform public anguish about the student loan problem but it is painfully obvious that they just don’t get how serious it is. The most recent Congressional legislation tying interest rates on student loans to the several points beyond the interest rates on treasury notes might have looked like an important reform in Washington, where achieving anything bipartisan is hailed a great victory, but not to the 37 million young Americans who are on the hook for more than one trillion dollars in student loans that cannot be discharged in bankruptcy. They owe an average of $29,000. In an economy that no longer produces enough decent jobs that’s enough to prevent many from achieving the perfectly reasonable and certainly laudable aspirations to launch careers, start businesses, begin families, or simply move into their own homes. The soaring loan delinquency and default rates suggest that many of them have already given up hope. Unless something very significant is done soon some will fall from the middle class permanently into the ranks of the working poor.

That an entire cohort of young Americans will be subjected to financial quasi-serfdom throughout the early 21st century is a problem not just for the individual debtors but for American society as a whole. We are diminished as a nation both economically and spiritually if their energy and talents are wasted. To frustrate so many hard working young people betrays the promise of the American Dream. If the United States is to remain a prosperous liberal democracy it needs a large and growing middle class. Greed might tempt some of the one percenters to entertain authoritarian alternatives but the rest of us know that is the path to disorder and violence.

What is needed is debt relief. When Wall Street was in danger of going belly up in 2007 and 2008 the second Bush and Obama administrations rushed to rescue the largest banks with enormous bailouts. The time has arrived to do something comparable for what we hope will become the middle class of the next half century. Writing down the bulk of the student debt would not only emancipate the quasi-serfs but provide the sort of stimulus that would generate a real economic recovery rather than the miserable virtual recovery that we have been experiencing.

The answer to the inevitable criticism that writing down the current student debt would add a lot to the government deficit is that we have done it before to achieve economic growth: the deep tax cuts of the Reagan administration added to the deficit to provide an economic stimulus. The difference is that writing down the student debt would provide far more bang for the buck. It is worth remembering that the same conservative politicians and pundits who now decry the size of the deficit gave their enthusiastic support for the War in Iraq.  If we can squander a trillion dollars to replace one Middle Eastern dictatorship with another then we can spend a trillion dollars to guarantee that America has a large and growing middle class.

The answer to the inevitable moral hazards argument that serious debt relief would simply encourage more indebtedness is the reality that much of the current student loan will never be paid off and that the Department of Education and the banks continue to encourage students to take out more student loans. Rather than continue to encourage further indebtedness we need state governments to once again fund higher education as if they understood how important it is for their state economies and for the opportunities it provides to their citizens.

The time has arrived to emancipate tens of millions of Americans and half measures will not suffice. Their futures, and ours, depend upon it.

Image: Indentured Student - Cartoon by DonkeyHotey via his flickr photo stream and used under a Creative Commons license.
John Hickman

John Hickman

John Hickman is Professor of Political Science in the Department of Government and International Studies at Berry College in Rome, Georgia, where he teaches courses on war crimes, comparative politics, and research methods. He holds both a PH.D. in political science from the University of Iowa and a J.D. from Washington University, St. Louis. Hickman is the author of the 2013 Florida University Press book Selling Guantanamo.

  1. Agonizing over the size of the federal deficit as being too large has always been a colossal fraud. After all, the deficit represents the difference between what the Treasury sends out and the dollars that come back (revenue) and which provides the unearned income on which our bond-clipping leisure class depends. Why the Treasury, which issues our dollars, borrows them back at a premium is a good question which Congress should be pressed to answer. After all, Congress has set up this round about which launders dollars through the Federal Reserve and participating banks before Main Street, maybe, gets a chance to use them.
    Now that some higher education loans have been transitioned from local and state banks to the Department of Education it is actually possible for the federal government to forgive these debts which, in many cases, bought little education and much administration. However, providing that relief would require an admission from Congress that the power of the purse still lies on Capitol Hill and the necessary relief is a direct consequence of their own poor management.
    It’s not just the deficit that’s been engineered by Congress to reward the leisured elite. The whole austerity schtick is designed to remind the electorate that they’d better vote right or the trickling economy will be reduced to a drip. Stripping the currency out of the real economy won’t kill it. After all, barter and hand-shakes still serve in other parts of the globe, but reverting to barter or communal sharing means that all the efficiencies of using money are lost. And that means much enterprise goes to waste, of which we already have more than enough.
    What’s to be done? Send people who know how to spend money wisely to Washington.

  2. More than one publication has identified this as a genuine drag on the economy. Unfortunately, students in debt from college loans have no lobbyists and accordingly no champions of any effectiveness in congress. It’s hard to watch a Braves game without being deluged by the irritating ads on behalf some of the least qualified among us, and I do note none identify this plight as important to them.

  3. Will Cantrell

    John, the student debt crisis in the U.S. is frightening and the one of the great scandals of our time. We’ve always been taught to believe that education is the way to climb into or –these days– stay in the middle class. The notion is a good one and by and large we’ve all bought into it. The problem is that even public education has been way overpriced (on a similar scale as “meat”).

    Congress as well as most of the politicians are CONSTANTLY carping abut the fact that we (i.e. American society) is committing generational theft by leaving our kids a national deficit with which they will have to contend. Seems to me, the REAL crime is the ungodly amount of student loan debt with which those same kids will also have to contend. A responsible Congress would do something REAL to eliminate the burden.

    (It’s interesting to note that at least three different authors in on the front page of The Dew INDEPENDENTLY mention or allude to our student loan debt problem.)

    Piece is well done. Will

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