On Debt

The political trick of Biden's "student loan forgiveness" scheme

I’ve been writing for a very long time, but I think the very first time when I “felt” like a real writer was in 2014. Though I’d already been writing occasional and rather clumsy blog posts on WordPress, few of my essays were ever read by anyone besides a handful of close friends. The moment that changed was when I wrote a rather sad essay called “Knight of Cups, Knight of Wands,” a tale of my “coming out” at Christian college and its aftermath.

In that piece, I described what it was like to realize I liked men early on, but to nevertheless find myself at an Christian College (specifically, Gordon College in Massachusetts) attempting to show myself as a good Christian “leader” in order to hold on to a large scholarship I’d gotten.

“You’ll lose your scholarship,” he warned me.  He wasn’t angry now, but afraid for me.  Care and love soaked his words, reforged his face.

I went to an administrator.  I’d heard she might be tolerant, maybe she’d help.  I explained everything to her, as best as I understood it.

“So, if I’m gay, I’ll lose this scholarship?”

She nodded and stiffened.

“Uh, I’m gay, so I’ll lose this scholarship, I guess.”

She nodded.

“I can’t afford to go here otherwise.”

“You’d like to withdraw, then.”  It wasn’t a question.  She handed me the forms I needed, and I left the office, and that was it.

That scholarship had paid for almost half the $20,000/year tuition. The other half was paid for through a mix of poverty grants, student loans, and two part-time jobs I was attempting to hold down while also doing my studies.

I skipped over a detail in that essay, since after I lost the scholarship but before I officially withdrew, I took out a few more loans to try to cover the rest of the year’s tuition. In other words, I went into more debt after this and still couldn’t afford to continue the next year.

You maybe already know this, but I never got a university degree. I did actually try to get one, enrolling in a much cheaper state university (the University of Southern Maine) a few years later. Unfortunately, because I still owed money to the previous college, I wasn’t able to take out any more loans or receive grants until I paid them back.

This put me in a very complicated position. I needed to pay them back before I could be eligible for more student aid. However, I already needed to make payments to the federal government for the loans I’d taken out, as the grace period was already over. The only way to delay those payments was to go back to university, but I could only do so by paying out of pocket until the large sum of money I still owed the Christian college was settled.

By then, I was also living on my own, renting an apartment and working full time at a minimum wage job. Already I had very little money left over at the end of the month, but I decided to try to pay for more studies anyway.

Then, that autumn, half-way through the semester, I got really, really sick. It was just a flu, but one with a fever so high and so long-lasting that I missed classes and work for two weeks. Of course, it being America, I had no health insurance, either.

Though my employer let me keep my job, the two weeks of lost wages meant I couldn’t make the third installment payment on my tuition for that semester. That meant the next semester, I couldn’t enroll until I’d paid that back, which meant I was now no longer eligible for payment deferrals for the student loans.

I remember the really awful conversation I had with the loan officer. My monthly payments were as much as my rent, and when I explained to her that this meant I’d have about 75 dollars left after rent and loan payments for utilities and groceries each month, she told me I needed to get a second job.

It’s pretty crazy, but I actually made several months of payments. I think it was five or six months. I made do by stealing food from the sandwich shop I worked at, and got an emergency deferral on my electricity bill, but eventually I finally admitted I couldn’t pay this.

So I defaulted.

When you default on your student loans, nothing immediately bad happens. You get lots of letters from the government telling you you’ve done so, and some phone calls, and at first you feel really, really bad. Eventually you get used to it, and despite all the warnings about how it will ruin your future, you start to shrug it off.

I did actually try to get out of default. There was a change in law that allowed for payments tailored to discretionary income, not just wages. I got an offer to begin repayments at half the original amount they’d demanded, and by then I was working a better job in Seattle, so I took it. But then I lost that job, and couldn’t pay, and I was in default again.

The worst that actually ever happened was the seizures of income tax returns. If you default for long enough, the Department of Education can force the IRS to forward any return you are owed to them instead of you. The first year that happened I was really frustrated—it was about $600, and I’d been hoping to use that money to get my wisdom teeth pulled out because of constant pain. They took the return, and the pain got so bad that I left Seattle for a few months to live in Ohio with my estranged father who’d offered to pay for the work if I moved in with him.

After that, I never tried to repay my student loans again.

The principle on those loans was probably much smaller than you might imagine. It was about $8,000 US, a little more than half a year’s income on minimum wage. When last I checked, the total amount owed had doubled to $16,000 after interest and penalties (and of course interest on penalties), and that was before I left the United States for Europe six years ago.

I never actually talk about this debt. I tried explaining it to my husband once, and he was rather confounded because he had none of the context needed to understand how American education and debt works. The average cost of public university tuition in the US is roughly $20,000 and almost twice that for private universities. In France, most bachelor degrees at public universities cost no more than 600 euro a year. In Luxembourg, university will cost about 1200 euro per year but is usually free. And of course rather famously, university is now free in Germany (both for natives and international students).

So, trying to explain “student debt” to a European is a lot like trying to explain anything else about America to them. They look at you like you’ve just escaped a mental hospital and are explaining that the aliens helped you do so.

I’m writing about all this obviously because of Biden’s plan to cancel up to $20,000 in student debt. I know that there are probably many people in the US utterly thrilled about this, and others who are deeply furious. And I think both groups are perfectly justified in their reactions.

Student debt, like all debt in the US, is a cruel racket. Saddling yourself with very large debts at the start of adulthood is a really awful thing to do, but worse than that is the fact that it’s the only way to even have a possibility of something beyond a minimum wage for many. And even then, there’s absolutely no guarantee that the university degree you paid for on credit will ever result in a salary high enough to pay it back.

Worse still is the inflationary glut of more and more people with university degrees competing with each other for the jobs promised by those degrees. The positions a bachelor’s degree might have earned you two decades ago now require master’s degrees—if not officially, then as a way to give you any kind of chance against the hundreds of others with bachelor’s degrees applying for that same post. People borrowing to go the university have every reason to be furious with this system and to be happy they’ll get some relief.

Those that did succeed and also managed to pay down or completely discharge their debt also have every reason to be furious, though. Had I somehow managed to keep paying, the $8,000 I borrowed in 1995 and 1996 would have been paid off ten years ago at roughly $11,000. After all the self-discipline, personal austerity, and probably really miserable living circumstance paying down that debt would have required, finding out later that it would have been fully forgiven would incite me to rage.

Also, those who decided never to go to university specifically because they were either too smart or too terrified to get into debt also have every reason to be infuriated. Watching one part of their generation get government funding for their increased wealth potential (however true or untrue it is in actuality) while they chose not to gamble with debt must be a lot like Occupy protesters felt watching bank bailouts.

Of course I probably stand to benefit from the student debt forgiveness, assuming it actually happens and I actually qualify. Neither of those are certainties, despite the triumphalism in the news reports. On the former point, there are absolutely going to be challenges to Biden’s policy. On the latter point: defaulters didn’t qualify for previous forgiveness schemes under Obama, including the ten-year full discharge program for those working as teachers and social workers. (I was in my fifth year of working as a social worker when the plan was announced).

Though I may benefit, and though many others will certainly benefit, it’s too easy to lose sight of the larger political problems few seem to be speaking about.

First of all, Biden’s approval rating has been lower than Trump’s quite often, and it hasn’t gotten any better. Also, all the polls I’ve seen suggest the Democrats will get trashed in the mid-terms. Whether or not the government actually ever admits that the US is in an inflationary recession, Americans certainly feel as if they are. Also, the US proxy war against Russia is going nowhere, despite increasing military aid. Fuel prices are awful and oil reserves are really low in the US.

Everything is going very bad for Biden and the Democrats, but forgiving student debt looks really good for the only voting demographic the DNC can ever count on anymore, urban university-educated “elites” (or the “Professional Managerial Class.”) It’s a really easy “win” requiring only that the government reclassify loans as expenditures, a simple accounting trick.

That being said, I don’t think it’s actually going to work all that well for the Democrats, specifically because so many groups, including poor minority groups who didn’t go to university, won’t benefit from it and have lots of reasons to feel angry about it.

The larger point is that the US government has been propping up the prices of tuition at both public and private universities through these loan programs. If people cannot afford to pay high tuition fees, enrollment would plummet. That would compel universities to decrease the fees in order to get more students, and to do so they’d have to stop paying their administrators such exorbitant salaries.

By pushing loans onto students, the government is in effect subsidizing the universities, not the students. And I mean pushing: at least in my experience, I felt simultaneously rushed into signing on the loans and sold on them by constant re-assurances from administrators that they’d be easy to pay off quickly. I was 18, had parents who were financially illiterate (and only partially literate otherwise), and had no real understanding what I was signing up for.

Of course, there’s nothing actually wrong with subsidizing universities. That’s after all what most European countries do. However, their subsidies aren’t a kind of third-party debt trick. Instead, the governments directly fund the public universities and keep tuition as such a minimum to be almost nothing (and in some places, actually nothing).

That’s the core problem with Biden’s plan. It changes nothing of the actual university system, does nothing to limit the out-of-control inflation of tuition, does nothing about the large pool of adjunct professors who can barely afford to live on their salaries, and of course absolutely nothing about administrator salaries.

What it will do, however, is increase the resentment between the urban university-educated sorts, the ‘liberals’ and ‘progressives’ who most stand to benefit from this, and those of lower income and no university education. Those people will not only not benefit, but will have every reason to feel as if they have been forced to subsidize the salaries of those who think they’re all redneck rural idiots.