A step, not the full solution


“I take two steps forward
I take two steps back
We come together
‘cause opposites attract”
“Opposites Attract” - Paula Abdul ft. The Wild Pair

Back when MTV still played music videos, I have a distinct memory of this one. Paula Abdul, at that point most well-known as the incredible choreographer of the Laker girls, was dancing with an animated cat and singing a duet! My 10-year-old mind was blown away how someone could act and dance with a cartoon - that had to take some significant talent!

Playing an “80’s hits” station recently, this song came up, and the lyrics just seemed so fitting for a very misunderstood effort going on in Washington.

On Aug. 24, President Biden announced that he was signing an executive order that was to be part of a three-part plan to alter the significant student loan problem in this country.

The first part has been covered extensively in a partisan manner - the immediate forgiveness of $10,000 of student loans to individuals making less than $125,000 or up to $20,000 of forgiveness of those who have Pell Grants. While I’m not going to get into this extensively, one area that has been oft missed in coverage is that borrowers who have paid during the pandemic when federal student loan repayment has been placed on hold will receive repayment for being diligent in loan repayment throughout the pandemic.

Rewarding those who have been responsibly paying off loans as well is an angle not mentioned once in coverage of the executive order, I don’t believe.

The second part of the plan is to fix the Public Service Loan Forgiveness (PSLF) program. The PSLF program has been in place for four Presidential administrations at this point, originally created during the George W. Bush presidency to encourage workers to take jobs with nonprofits, in the military, or with certain government positions, especially those in rural or underserved areas.

That program has been expanded over time to include educators in at-risk neighborhoods (added during Bush’s administration), mental health workers (added during Obama’s administration), and other social workers (also added during Obama’s administration).

The problem is that funding the administration of the program has been left in the hands of Congress, and neither party seems to find the program a particular election-time selling point, so it’s frequently been left without adequate funding for staff and/or oversight.

That means thousands and potentially hundreds of thousands of Americans have been denied loan forgiveness already because they were willing to work in jobs that paid less, had extreme hours, had added risk, and often meant less room for immediate promotion.

Those jobs serve millions of Americans in vital services that are desperately needed, yet those willing to take the financial sacrifice to ensure all had proper service were left behind by a program that wasn’t staffed properly, lost paperwork, and didn’t have proper oversight to see that this was happening for years.

Getting the backlog of PSLF-eligible forgiveness granted is estimated to have a larger impact than the $10,000 forgiveness that was announced, just to give an idea of the severity of the mess the PSLF program has faced.

Finally, the third part is to drastically increase Pell Grants and put into place accountability boards within the Department of Education to check the costs of schools nationwide. Pell Grants are essentially free money to a college, so they are going to be used as a way to keep college costs in check - costs rising too fast at a particular college, Pell Grants will be removed from or severely reduced at the institution.

There was a time in this country that higher education was considered important enough that world-renowned institutions like Cal-Berkeley were free to attend, paid for by taxpayers, even for those from out of state. Even prestigious schools like Harvard and Yale for a full year’s tuition cost $400 in 1930, roughly the total of an average working man’s wages for 4-5 months. It would obviously take time to save up that kind of money, but it was viable.

Harvard in 2022 costs a student more than $70,000 per year to attend. The average family income in 2021 was just shy of $88,000, meaning a family would need to pay 10 months of gross income to pay one year’s expenses at Harvard for a student now. That’s at least double, inflation-adjusted, and allowing for a family income to cover costs rather than one income in 1930. The word “viable” tends to leave the discussion at that cost level.

The sad fact is that college costs had one central point when they exploded - integration.

College was considered “high brow,” even when it was free, so much so that those who were middle-class or lower-earning prior to integration were often considered extreme outsiders on a college campus.

When universities were forced to integrate, some of the schools that fought hardest were those in that “prestigious” bucket, the schools with endowments that were nine figures in the 1960s and now are into the billions of dollars for some schools (Harvard’s is more than $53 billion, for example). Those schools wanted to keep the “riff raff” from campus, assuming, of course, that those of differing backgrounds, races, and certainly financial backing would denigrate the collegiate atmosphere. Making the institute incredibly expensive was the “answer” to keeping college for the elite.

Prices escalated quickly beginning in the 1960s, but the 1980s saw a shortfall in the national budget that enterprising D.C. economists bailed out using colleges, leading to the final price push to where we are today.

At the time, the limit for federal student loans was a paltry $2,500 per year. To keep on the Harvard theme, the cost to attend Harvard in the mid-80s was roughly $15,000 per year. Those economists saw that increasing the loan limit would allow more people to borrow, which would bring more money into the government as (assumedly) those people paid off their loans.

A freshman starting in 2022 in college can take $31,000 in federal student loans during four years of undergraduate school as a dependent and $57,500 as an independent student. That did lead to more people being able to borrow to attend school, but many of those who attended school were unable to pay back the loan for a host of reasons, and legislation passed in the late-1970s made federal student loans something that cannot be discharged during bankruptcy proceedings, meaning even someone declaring bankruptcy is still saddled with student loan debt.

To get a grasp on the impact of the decision to increase borrowing ability to students, the country’s debt has increased significantly since the 1980s, in large part due to this decision to increase the maximum amount of student loans that can be taken out. Roughly 50%-65% of the entire $2.5 trillion national deficit is student loan debt owed to the government, with some estimates that it could be as much as 70-75% of the total national debt.

Former President Barack Obama appeared recently on the Netflix series “The G Word” with Adam Conover and discussed that while many would like to see instant actions in Washington, D.C., the truth is that most work done is like steering a very large ship. One full turn of the wheel moves the ship only slightly, but it does move the ship.

While many may disagree with pieces, or the entirety, of Biden’s executive action, it is the first turn of the wheel to move the ship of college costs and student loan debt that absolutely needs to turn in this country.

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