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In the debate on student loans, we hear the phrase "personal responsibility" a lot. It was a personal decision to go to college, it benefits you personally, and it's your personal responsibility to pay it back. No complaining. But does this focus on personal responsibility tell the whole story?
For my family, it does not. The truth is that the weight of student loans has reverberated through three generations. It has impacted every facet of my family's financial lives and stopped us from building wealth. My family is not unique; student debt impacts many families, communities and indeed our whole society. As the leader of an advocacy organization that works for access to higher education, I'd like to share my story.
My Story
It started when I was 18 years old. I took out $20,000 in loans over the course of my college career at California State Dominguez Hills. My brother, a year and a half younger than me, borrowed a similar amount to finance his education. My mom also returned to school at this time, but since she went to trade school, she only needed to borrow a fraction of what my brother and I did.
More than 20 years later, I'm still repaying my loans. In fact, I now owe $50,000, more than twice what I originally borrowed. There are a few reasons for this. For one, while I understood that I had six months after graduation to enter repayment, I did not actually know how to make my payments affordable. When I did contact my servicers, I was always placed in forbearance or deferment, without understanding the difference between them. When those options were exhausted, I defaulted.
This is the point in the story where I'm used to hearing about "personal responsibility." But here are two factors that change the situation. First, during this time, I should have been eligible for Income Contingent Repayment (ICR), but no one ever informed me. If I had known about this program, my payments could have been as low as $5 a month, based on my income level at the time. And those payments would have counted toward future forgiveness. My servicer failed me.
Secondly, in 2007, Public Service Loan Forgiveness became the law of the land, allowing loans to be forgiven after the borrower makes ten years of payments while working for a qualifying employer like the government or a nonprofit. Again, I was never told about this program, and did not find out about it until 2016. By that time, I had worked in the nonprofit sector for ten years but had only made a few qualifying payments. The system failed me over and over again.
The Bigger Picture
Once again, my family is not unique. 43 million Americans have student debt — and the burden falls most severely on women and people of color. In fact, Black women hold more student loan debt than any other demographic group. Upon graduation, women of color confront not only a gender and racial pay gap — with Black and Latina women earning 62 and 54 cents for every dollar non-Hispanic white men earn — but also a long-term, persistent and demonstrable gender and racial wealth gap.
Wealthy families (disproportionately white) who are able to pay for higher education out-of-pocket send their new graduates into the world debt-free and thus able to build wealth right from the start. Meanwhile, those with student debt often have to delay life milestones like buying a house, investing and saving for retirement. Of course, this does not just impact the borrower, but their whole family for generations. Wealthy families stay wealthy; lower-income families try and fail to catch up.
I am seeing this play out on a smaller scale in my own family. My family prioritized repaying my mother's student loans, and as a result, hers are paid in full. But even paying off one set of loans meant sacrifice. My whole family has had to cut back on saving for the future to pay back this debt. Our financial future is more unsteady than it should be because of student loans. Now, while I am proud to be able to send my oldest daughter to college, we have already spent countless hours applying for scholarships.
Our student loan system is broken. How can it not be when someone like me can spend nearly two decades paying a loan back and now owe twice as much as I borrowed?
It's time our politicians take notice and do something about this. The student loan pause has been a lifeline for millions like me. Instead of putting $400 toward my loans every month, I was able to pay down my mortgage and other bills. I even increased my credit score. But this relief is temporary. We need a permanent solution.
A 2018 report from the Levi Economic Institute at Bard College projected the macroeconomic effects of student debt cancellation and concluded that it would significantly benefit the economy. Their projections estimate that student debt cancellation could boost the GDP by upwards of a trillion dollars in ten years, which would lead to significant job growth — all while having minimal effects on inflation or the federal budget. As for the impact of cancellation on individual businesses? Consider the rise in popularity of student loan benefits as a way to attract employees in a tight labor market. If the government does not cancel student debt, businesses will soon face having to carry the burden in an effort to attract qualified talent.
Leaders at the federal level must work toward a permanent solution, starting with broad student loan cancellation. Then, we all need to fix the problems that led to this crisis in the first place. We must make sure this never happens again.