What is It?
Student loans are a particularly dangerous type of consumer debt. Student loan debt affects over 44 million Americans in the amount of $1.5 trillion dollars and growing. The average student loan borrower is in debt of over $34,000. Student loans are second only to mortgage debt in the United States.
So why is this debt so dangerous?
First, Congress has systematically stripped consumer protection rights from student loan debt for decades. There are now very limited bankruptcy protections and very steep penalties for those borrowers found to be delinquent or in default of their loans. Wages, tax returns, social security, and disability income can all be garnished without a court order. Professional licenses can be revoked. Debts can double or triple in size from late fees, interest, and other penalties.
Second, the student loan industry is largely unregulated by the federal government. According to NPR, “A critical new report from the U.S. Department of Education’s Office of Inspector General finds the department’s student loan unit failed to adequately supervise the companies it pays to manage the nation’s trillion-dollar portfolio of federal student loans.” Without oversight, federal student loan borrowers fall victim to predatory loan practices and inept service from their loan servicers.
Student loan debt affects every profession, every age, every ethnicity and remains a serious obstacle to financial stability for millions of Americans.
So where do we go from here?
The federal deferment of student loans with zero percent interest gave us much needed breathing room in the middle of this pandemic. From here, we need to recognize that the federal deferment isn’t a permanent solution. A majority of all student loan debt needs to be forgiven coupled with universal higher education.
Putting this enormous debt on our aspiring middle class does not serve us as a country now or in the future. We should support Joe Biden’s plan to eliminate at least $10,000 of student loan debt for every borrower. We should support his plan to double maximum Pell Grants and make college truly affordable. We must acknowledge that as a country we prioritize an educated workforce not an industry of debt to be beholden to. With new leadership on the horizon, student loan debt can truly become a relic of an outdated time and universal education the standard of 2021.