That merit should yield at least a decent living

Full disclosure: I have hundreds of thousands of dollars in student loans, accumulated on my way to my Ph.D., but the Pennsylvania Higher Education Assistance Agency (Pheaa) is not my servicer. My student loan servicer horror story wasn’t really a horror story so much as an absence of communication that convinced me to change servicers as I consolidated all of it into income based repayment and my advice to other borrowers since has been consistently to get out from under Navient. I gather Great Lakes also has its problems, but for the most part, they’ve been much more tolerable.

“No doubt critics will see [the Pennsylvania Higher Education Assistance Agency] bowing out [from federal student loan servicing] as a positive development,” Justin S. Draeger, president and chief executive of the National Association of Student Financial Aid Administrators, said in an email. “But with one major servicer exiting, and still no comprehensive plan” from the Education Department “on how they’ll be transitioning millions of borrowers into repayment, let alone a publicly available comprehensive strategy on loan servicing, the task before the Department grows more daunting every day.”[1]

Apparently Pheaa had been the target of numerous complaints, at least some of which apply to the industry as a whole, and is withdrawing due to “the complexity and cost of managing those programs.”[2]

The Biden administration was already considering delaying the resumption of repayment the Trump administration had paused for the pandemic.[3]

It’s clear the White House needed to extend the payment pause a month ago. It should extend it for the foreseeable future until there is a plan to deal with this massive disruption.[4]

Progressives, including some in Congress, advocate cancelling all federal student loan debt.[5]

Forty-three million people owe $1.6 trillion in student debt, a sum bigger than collective credit-card debt or auto debt. Most have gone more than a year without making a payment as part of a first-of-its-kind experiment by federal policy makers to use the student-loan program as a form of economic relief during a crisis. The government stopped charging interest on student loans when it froze payments in March 2020.

Getting Americans to restart their loan payments is expected to be a major challenge. About one in 10 borrowers have made payments on student loans during the pandemic, according to Mark Kantrowitz, a higher-education consultant. More households made permanent moves across county lines during the pandemic, according to U.S. Postal Service change-of-address data, and that could make it harder for the federal contractors that collect student debt to track down borrowers.

Some borrower advocates say many people can’t afford to resume payments, or are unwilling because they have come to expect a chunk or all of their debt will be forgiven. But signs of life for such proposals—either in Congress or via executive action from Mr. Biden—are nil, with Mr. Biden and Senate Democrats both pointing at the other to act.[6]

The trouble, of course, is that a college education is seen as a private benefit rather than a public good,[7] which makes this a morality issue, partly grounded in deficit hysteria, which itself derives from a fundamental misunderstanding of money and the federal government’s role in its creation.[8]

Many progressives agree that [student loan] debt relates to a key set of problems: disproportionate financial burdens on students of color, college dropout rates, and predatory practices by for-profit colleges. But they disagree on how to solve them. Some critics say blanket debt relief would amount to a subsidy for relatively affluent collegegoers.

Student debt is a serious problem for many people, said Sandy Baum, a nonresident fellow at the Urban Institute and a professor emerita of economics at Skidmore College. But much of it is held by people who went to graduate school and by upper-income households, she said. [Bernie] Sanders’s [and Ilhan Omar’s] proposal “would help more-affluent people the most.”[9]

Full disclosure again: My student loan debt meant I had to rely on the dealer for financing my new car (delivery of which is now expected on July 15-19); but because I’m on income-based repayment, this debt has otherwise had little impact on my life because my payments have been zero or close to it. While I value what I’ve learned enormously, it’s hard to argue that my education has been a private monetary benefit: I still can’t get a real job.[10] And I’m far from alone. As one tenured professor acknowledged in his post-modernist approach to the caste system in the U.S.:

Although I am not a gambler, I also thank Lady Luck for being employed as a tenured professor, which makes my academic production possible. It might have been otherwise. Countless potential discoveries, innovations, and advancements are never made because most faculty and intellectuals have been discarded, living as coffee baristas and wait staff versus the alternative of a homeless existence in a McDonaldized contingent academia.[11]

Our political and economic elites have profoundly mistreated and misled those who invested in an education, only to discard us, only to relegate us to a class of permanently underemployed, in part due to an over-hyped fear of inflation,[12] and in part because capitalists don’t want to pay anybody anything at all.[13] We thought we were opening the door to opportunity. What we, along with all low-wage workers and the unemployed, are getting instead falls far short of what international human rights law prescribes in a treaty[14] that the U.S. stands among a mere four countries in refusing to ratify.[15]

The appeal to morality on student loan debt thus has it entirely backwards, for it is we who are owed, rather than those we allegedly owe those trillions of dollars to.

  1. [1]Eric Kelderman, “The Plan to Resume Federal Student-Loan Repayments in October Just Hit an Obstacle,” Chronicle of Higher Education, July 8, 2021, https://www.chronicle.com/article/the-plan-to-resume-federal-student-loan-repayments-in-october-just-hit-an-obstacle
  2. [2]Eric Kelderman, “The Plan to Resume Federal Student-Loan Repayments in October Just Hit an Obstacle,” Chronicle of Higher Education, July 8, 2021, https://www.chronicle.com/article/the-plan-to-resume-federal-student-loan-repayments-in-october-just-hit-an-obstacle
  3. [3]Josh Mitchell and Joshua Jamerson, “Student-Loan Holders Get Piecemeal Relief From Biden Administration,” Wall Street Journal, July 3, 2021, https://www.wsj.com/articles/student-loan-holders-get-piecemeal-relief-from-biden-administration-11625304600
  4. [4]Mike Pierce, quoted in Eric Kelderman, “The Plan to Resume Federal Student-Loan Repayments in October Just Hit an Obstacle,” Chronicle of Higher Education, July 8, 2021, https://www.chronicle.com/article/the-plan-to-resume-federal-student-loan-repayments-in-october-just-hit-an-obstacle
  5. [5]Steven Johnson, “‘No Exceptions, No Questions Asked’: Progressives Propose Legislation Canceling All Student-Loan Debt,” Chronicle of Higher Education, June 24, 2019, https://www.chronicle.com/article/No-Exceptions-No-Questions/246553
  6. [6]Josh Mitchell and Joshua Jamerson, “Student-Loan Holders Get Piecemeal Relief From Biden Administration,” Wall Street Journal, July 3, 2021, https://www.wsj.com/articles/student-loan-holders-get-piecemeal-relief-from-biden-administration-11625304600
  7. [7]David Benfell, “‘Private benefit’ versus ‘public good,’” Not Housebroken, June 7, 2021, https://disunitedstates.org/2021/06/07/private-benefit-versus-public-good/
  8. [8]Stephanie Kelton, The Deficit Myth (New York: Public Affairs, 2021).
  9. [9]Steven Johnson, “‘No Exceptions, No Questions Asked’: Progressives Propose Legislation Canceling All Student-Loan Debt,” Chronicle of Higher Education, June 24, 2019, https://www.chronicle.com/article/No-Exceptions-No-Questions/246553
  10. [10]David Benfell, “About my job hunt,” Not Housebroken, n.d., https://disunitedstates.org/about-my-job-hunt/
  11. [11]John Asimakopoulos, Acknowledgements in The Political Economy of the Spectacle and Postmodern Caste (Leiden, Netherlands: Brill, 2020), xiv.
  12. [12]Stephanie Kelton, The Deficit Myth (New York: Public Affairs, 2021).
  13. [13]David Benfell, “About that alleged ‘labor shortage,’” Not Housebroken, June 10, 2021, https://disunitedstates.org/2021/05/09/about-that-alleged-labor-shortage/
  14. [14]International Covenant on Economic, Social and Cultural Rights, December 16, 1966, United Nations, General Assembly resolution 2200A (XXI), https://www.ohchr.org/en/professionalinterest/pages/cescr.aspx
  15. [15]United Nations, “Ratification Status: International Covenant on Economic, Social and Cultural Rights,” January 15, 2019, http://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=IV-3&chapter=4&lang=en

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