Graduating Class of 2015 Most Debt Burdened in History
TRNN Top Stories of 2015: 43 million people are carrying $1.3 trillion in student debt. Josh Hoxie & Mayra Guizar examine the options on the table for dealing with this crisis.
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries coming to you from Baltimore.
Americans owe $1.3 trillion in student loans, with $43 million people, young, old, and everyone in between burdened with student debt. This debt has shaken the fundamental values of the nation’s higher education system. Now the Republicans are proposing to cut $150 billion from student aid in the recently passed budget bill, including freezing the Pell program that helps needy students acquire higher education.
College costs have increased 1000 percent since the ’70s. Students are graduating with an average of $25,000 to over $100,000 in debt, and often with an education that will not secure them a good-paying job.
Now joining us from Boston is Josh Hoxie. Josh directs the Project on Opportunity and Taxation at the Institute for Policy Studies. Also joining us from Bellingham, Washington is Mayra Guizar. Mayra is a senior at Western Washington University, and serves on the U.S. Student association board of directors, chairing the Pacific Northwest region.
Thank you both for joining us today.
JOSH HOXIE, DIRECTOR, PROJECT ON OPPORTUNITY AND TAXATION, IPS: Thank you.
MAYRA GUIZAR, BOARD OF DIRECTORS, UNITED STATES STUDENT ASSOCIATION: Yeah, thank you.
PERIES: So Josh, let me go to you first. Josh, this, the student loan crisis in this country is massive, and the issues faced by a graduating student who had borrowed from the system is tremendous. Can you outline for us what are some of the issues that a graduating student, an average student will be faced with in the coming years?
HOXIE: Absolutely. So student debt today now tops over $1 trillion dollars higher than credit card debt. And the class of 2015 is now the most indebted college class in history, just passing classes before it, and probably likely to be, 2016 will be the next highest after it. Students today graduate with tens of thousands of dollars in debt. I think the average today is about $27,000. they’re faced with mortgaging their future in order to get an education in this country. And what that means for them is they are not buying houses at the same rate as they otherwise would. They’re not starting businesses at the same rate they otherwise would. They’re also not going into jobs that they would want to take, because they have to find employment that will be able to pay their student loan payments.
PERIES: And Mayra, let’s begin with you. Now, you are a student in your senior year. What is the debt burden you are carrying in your last year at school?
GUIZAR: Okay. So yeah, I’ll be graduating in the fall. And I’m currently looking at $30,000 in student debt. And so to finish this last quarter, you know that will definitely go up. It’s something I’ve been struggling–I’m a first-generation student, the first of my family out of three to go to college. I have another younger brother who’s about to go into college who’s about, you know, to face the similar struggles of having to carry student debt on him as well.
PERIES: Josh, the higher education system in this country has shifted its burden from the public pocket to the private pocket, and families and students in the system. And now that we are almost slipping into an election year, suddenly a number of politicians are actually talking about reforming the system. What kind of proposals are there out there that actually, in your opinion, begins to address the problems that students are facing?
HOXIE: Yes. So the problem with higher education is structural. It’s really a problem that we need to invest significantly more money into providing four years of public higher education, and we should reduce the burden on students preferably all the way to zero so that they can succeed and achieve their potential.
You mentioned we’re coming into an election year. There’s only two candidates so far announced on the Democratic ticket, Hillary Clinton and Bernie Sanders. Bernie Sanders has unequivocally said that he supports four years of free higher education and wants to create a system similar to what they have in Northern Europe, where–a country like Denmark not only is higher education free but many times students are paid to go to school. On the other side, Hillary Clinton has been a little bit more dodgy on the topic. I haven’t seen her come out strongly for free higher education. She hasn’t [inaud.]
And one thing that I wanted to add on that is that a lot of folks think that this is just about young people, of the $1.3 trillion in student debt. Over $40 billion of that is held by people over 60. So this is a, really across the entire economy. That number shot up 850 percent over the past decade. So really it’s affecting everyone in our economy, not just young people.
PERIES: And why is that so?
HOXIE: Well, you’ve got a lot of people going back to school after the recession, and they were looking to improve their skills because they couldn’t get jobs. And you’ve got a lot of parents, like Mayra was talking about, taking on a debt load for their kids. And there’s just not enough money in people’s pockets. There’s just not enough to cover this, this huge expense. And yet there’s plenty of money in the economy to cover it if we were to equitably–have a fair tax code.
PERIES: Now, Elizabeth Warren has come up with some plan of addressing some of the grievous problems and the crises the student loan system is facing in this country, and the difficulty students are having paying back their loans. What are some of the most interesting elements of what she is proposing, Josh?
HOXIE: Yeah, so she came out with something called the Bank On Students Act, which is a really great idea to reduce the interest rates that students can borrow money at to the same amount that the Federal Reserve issues to the big banks. And her point is why can we trust the big banks more so than we can trust students given their record? So, like when I graduated college, my interest rates were at 6.8 percent. The current subsidized rate for public federal loans is at 3.4 percent at the bottom, and it can actually fluctuate from there, going up. And the banks can get money from the Federal Reserve at 1 percent. So why can’t students?
And she’s actually proposed funding now with something called the Buffet Rule, which is a very simple idea that says Warren Buffett, people like Warren Buffett, should not pay less in taxes than their secretaries do, as Warren Buffett famously said. So basically it’s a minimum tax on incomes of over $1 million.
PERIES: And Mayra, get in on this. What is the American Student Association advocating for that is the most progressive? If you were to really push the envelope here, what are they advocating for?
GUIZAR: Absolutely free higher education. So not just tuition. We’re talking about all the finances that it takes for a student to get through their entire time while they’re in higher education. Whether that be housing, books. Everything else like extra funding that they may need to get by. Groceries. That that’s funded for and that’s accounted for. And so we need to make sure that we’re providing this for all students, and that’s something that we’re pushing for and that we truly believe in and are passionate about. We want it all, so that’s something that’s important for us, and I think continuing to push that message is really important, especially now.
PERIES: And what do you think of what Josh just said, in terms of Elizabeth Warren’s proposal here?
GUIZAR: She’s definitely been a champion for students. Definitely working to support students in terms of lowering interest rates. But again, for us, for the USSA, for the students who are involved representing all the students in the country, we’re wanting the whole thing. So we want it free. And so that’s something we’ve been fighting for, and making sure that the education system is equitable for all, and accessible for all, and making sure that we’re providing that free education.
And so yeah, we definitely, again, recognize that Warren’s definitely been there for students, but on top of that we want free higher ed.
PERIES: And I don’t think that’s forthcoming anytime soon. So what is the U.S. Student Association, what are they advocating for now in terms of what is foreseeably attainable in the near future?
GUIZAR: We’re pushing for–right now what we can see is for the Pell grants. So we’re wanting more access, more students to be able to access the Pell grant, and also increasing the limit of how much students can get from the Pell grant. So that’s something that we’re working on right now. That’s something, a focus–a huge focus that we’ve been looking into. Which, having this giant vote bloc of, we’re over here trying to expand and grow and give more students and more families access to the Pell grant while Congress is proposing this cut on budgets. That’s really going to impact the Pell and the recipients and students who want to go to higher education but don’t have the means to.
PERIES: And Josh, finally to you. These particular cuts to higher education is in the current budget that’s awaiting President Obama’s signature. Do you think he’s going to sign off on it?
HOXIE: I don’t. I don’t think the President supports these cuts. It’s part of a bigger budget that includes trillions of dollars in cuts to absolutely vital programs that working and middle class families depend on. And cuts to the Affordable Care act, which is the President’s marquee legislation, so he’s not going to support these cuts.
He’s actually come out with a proposal for free community college. So two years of free higher ed, which we wholeheartedly support and would like to see enacted. There’s examples of that in the states and Republican legislatures in the states that have supported it. So I don’t think that it’s too far off that we could see action in that direction in the near future.
PERIES: Josh and Mayra, thank you so much for joining us today.
HOXIE: Thank you, really appreciate it.
GUIZAR: Yeah, thank you so much.
PERIES: And thank you for joining us on The Real News Network.
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