by William O. Pate II
Rarely do you hear of student loan debt driving a person to file for bankruptcy. With options for income-based repayment and deferrals, student loan companies have many avenues to keep a former student paying their loans (or, at least, some of the interest on those loans) without a bankruptcy trustee getting involved. Unfortunately, Texas Guaranteed Student Loan Corporation wasn’t one of the servicers willing to work with me last year. They wanted their money — their exorbitant $500-plus monthly check — now. And they wanted my employer to garnish my wages to make sure I sent it. So, I told them I’d file bankruptcy if they didn’t work with me. They refused, until the day after I’d filed for bankruptcy. Then it was too late for them. Now, they receive cents, if anything, until our five years in bankruptcy is up.
Previously, I’d written them (and our other creditors) letters stating our unemployment and medical situations. I’d paid them monthly — less than the minimum due, but as much as I could afford.
There’s no way we could have afforded for them to take that money. I’d only just gotten a raise to a livable wage when I was hit with the wage garnishment letter.
So, now, they get virtually nothing each month. The debt grows. It won’t go away like most debts do after bankruptcy. It just continues to gather interest. But the bankruptcy protects me from being swallowed whole. For now.
With a more systematic understanding of the monetary system, as provided by Lucille L. T. Eckrich in The Neoliberal Agenda and the Student Debt Crisis in U.S. Higher Education, a new book in the Routledge Studies in Education, Neoliberalism and Marxism series, we see that the banks are earning profits — interest — on nonexistent money. No one ever actually loaned me money to attend college. The banks just created a debit on their balance sheets. (And, during the 2008 financial crisis, were bailed out. That “debt” has been paid.)
The government doesn’t issue new money. Private banks issue money in the form of debt. This is a fundamental aspect of our monetary system that most don’t understand. The government doesn’t issue new money. Private banks issue money in the form of debt. So, the dollars I borrowed for college didn’t exist before they were created as a debt that I owed. The only money that exists is that which I pay back.
Total national student debt stands at $1.4 trillion and increases by $3,000 each second. The amount of student debt incurred each year is greater than the GDP of approximately 30 countries.
Why? Because the wealthy elites who profit from this system have convinced everyone that college is a private good. That it only benefits the person who attends. Sometime in the past we got away from the acknowledgement that it’s a social good for people to get an education. That it’s profitable for them (which is arguable given the student debt load now) and for society. So, society should take some responsibility in funding it. A far greater responsibility than the current inadequate and shrinking state resources allocated to higher education.
Students need only look at the front of the classroom for examples of debt-ridden individuals. The second part of the book brings the voices of college educators — often adjuncts with poor pay, no benefits and no certainty as to their jobs — facing down massive debt loads into the fray. What’s most interesting in reading the stories of these peoples’ debt woes is how human they are. People don’t just decide not to pay. They can’t pay. Illnesses, deaths, children happen. Life happens. The roboticus economicus does not exist. As Horn writes in his essay,
I had faith that if I could earn my spot in top universities, I would be able to parlay that academic success into financial success. Extenuating familial circumstances and a misunderstanding of the new neoliberal economics of higher education proved that my faith was egregiously misplaced.
Don’t believe me that corporations have started taking over education? The private, for-profit education company Phoenix University received $3.8 billion in federal funds from student loans over a recent five-year period. Phoenix University is regularly ranked as the highest recipient of federal student aid money. This is just another example of the privatization of social services that heralds neoliberalism’s ascendance.
Is it starting to sound like student loans only truly benefit the wealthy and banks?
How do we fix this, though?
The authors look at a few suggestions — Work Colleges, crowdfunding debt payments and others — and finds them lacking. It ultimately comes down to reorganizing our monetary system so that the government actually issues money through public works rather than the private, debt-driven system we have today. Further, the debt will have to be forgiven or otherwise reduced. As it is, it is untenable. It will only get worse.
As Kay Ann Taylor writes, “Neoliberal capitalism is concerned only with profit, not people.”
There’s no moral responsibility to pay one’s student loan debt if it is debilitating. Money has no morality.
The Neoliberal Agenda and the Student Debt Crisis in U.S. Higher Education is an incisive, scholarly look at how the influence of a debt-driven monetary system coupled with our more recent neoliberal policies drives U.S. student loan debt. It looks at how neoliberalism has transformed our education system from that aimed toward the greater good to only being considered a personally profitable endeavor. It begins a needed look at the connection between our monetary system and higher education financing. The authors’ warnings and recommendations should be heeded, if only as thought-sparkers. I highly recommend the book to both academics and lay readers interested in the subjects.
William O. Pate II is the editor and publisher of the San Antonio Review.