In this 2012 Moyers Moment from Moyers & Company, Heather McGhee, director of the Washington office of the research and advocacy organization Demos, talks about the crushing burden of student debt. She points out that while young people are paying as much as 18 percent interest on private student loans, “the banks they’re paying that interest to are getting, basically, a zero-interest loan from the government every day.”
Bill Moyers: I read just the other day that only 29 percent of Americans have college degrees. Is college still a way up and out?
Heather McGhee: It is. And you would think— I mean, this is one of those great ironies. At the same time that we had the globalization, the transfer from the industrial age to the information age, and so the premium on higher education became so high. At the same time that we decided to reorder our economy so that those with information and with knowledge would be able to gallop ahead, we also made it less affordable and more difficult for people to get that new golden ticket to a middle class life. It doesn’t make any sense. At around that same time, around when I was born, we shifted our federal support for higher education. It used to be the majority of it was grants, grants like the G.I. Bill that put my grandparents to college, grants like my parents had, to loans, which is what the majority of my generation is now taking on in order to basically pay government and the banks for the privilege of having a middle class life.
Bill Moyers: Yeah, what does it say that many of you have to pay Wall Street to go to college today?
Heather McGhee: It’s amazing, isn’t it? And not only do we have to do that, but particularly with these private loans, which are just galloping, galloping away, in terms of how quickly they’re becoming a share of the market, it’s like 18 percent interest on some of these private loans. It’s like putting your $10,000 tuition on a high-interest credit card. And if you think about that, if you think about the fact that the next generation has to pay an 18 percent interest rate to get a college education, whereas the very banks and financial companies that they’re paying that interest to are getting basically a zero interest loan from the government every day, it’s shocking.
Bill Moyers: We have a video clip of a young man who’s speaking at a rally objecting to tuition increases. Let’s take a look at it.
Protester: Me myself, I’m in debt $70,000 and when do I expect to be free of this? Possibly never. I actually got a letter from Sallie Mae, saying that if I don’t start paying today, $900 a month, they are going to have more aggressive attempts at collecting my debt […] And so I refuse to pay this student debt, for this ball and chain that will follow me the rest of my life. And so I’m going to burn this right here and now.
Bill Moyers: How do you respond to that?
Heather McGhee: Honestly, it really does breaks my heart, Bill. If you think about what young people are facing when they know that they have to play by the rules, go to college, get a good education. And yet, they know that the price of that is going to be tens of thousands of dollars of debt on the other end, what options are young people supposed to have? I really don’t think that we can say as a country that we are a middle class nation, that we care about recreating a middle class for the future generation, and have an entire generation indebted. And have so much money diverted from more productive uses in the economy simply to pay off loans from a really flawed financial aid system.
Bill Moyers: He quoted a letter from Sallie Mae. For the benefit of my audience, who’s Sallie Mae?
Heather McGhee: Sallie Mae, other than being one of the most profligate contributors to Washington and one of the biggest lobbies, is a massive financial company that is, their entire business model is on student loans, private and federally subsidized.
Bill Moyers: As you know, the Obama Administration tried to do something to clean up that student loan business, and got a piece of legislation through that was promising. But then lobbyists from the industry, including many who belong to the Democratic Party swarmed all over it, and have, in effect, throttled it. What does that say to you?
Heather McGhee: It says that the financial industry is an equal opportunity employer of Congress people, unfortunately. We’ve really seen an incredible explosion in the amount of financial contributions from the financial sector, including Sallie Mae, Wall Street banks, real estate, insurance over just the period of my lifetime. And the result has been that any time there are any kinds of steps forward, there’s always a desire to sort of erode the progress.
Bill Moyers: Yeah, you’re sympathetic to that young man and to all of them like him. But do you think refusing to pay is a solution?
Heather McGhee: You know, I think the right solution would be for us to undo what Sallie Mae and other lenders got slipped into that terrible 2005 bankruptcy bill. Which is that private student loans and student loans are not dischargeable in bankruptcy. I mean, think about it, bankruptcy, which, you know, huge, multi-billion dollar corporations are— seem to be filing every day and move on, just as if nothing happened. And yet, regular, middle class families, the average American family, the two most important loans in their life, the two most onerous loans in their life, for education and for their primary residence, they can’t be relieved of in bankruptcy. Our bankruptcy code says to the American people, “You don’t have any second chance when it comes to those two major primary loans.” We’re just making people give up so early on, because it’s impossible to get out from under debt like that.
Watch the full conversation between Bill Moyers and Heather McGhee.