Tackling Student Debt and the Privatization of Education

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Update: Senator Elizabeth Warren’s bill was voted down in the Senate this morning, but sparked a vigorous debate on the issue.

Elizabeth Warren kicks off the Higher Ed, Not Debt campaign in Washington, DC. March 6, 2014. (Image: Generation Progress/Layla Zaidane)

Elizabeth Warren kicks off the Higher Ed, Not Debt campaign in Washington, DC. March 6, 2014. (Image: Generation Progress/Layla Zaidane)

On Tuesday, Sen. Elizabeth Warren (D-MA) introduced a bill addressing two of her top legislative priorities: The crushing burden of student debt and tax loopholes that allow the wealthiest Americans to shell out a smaller share of their incomes than do many of those in the middle class. The measure would allow people who took out student loans at a higher rate than they could get today to refinance their debt the same way one might refinance a home mortgage. It would also give people with high-interest private loans to roll them over into the Federal Direct Loan program.

The measure would cut into the government’s revenues, and Warren would make up that shortfall by implementing the “Buffett Rule,” which would raise taxes on those making $1 million or more in income.

The bill is part of a campaign called “Higher Ed, Not Debt,” which Warren helped launch in March. It’s being waged by a broad coalition of unions and progressive groups including the Working Families Party, Progress Now and Jobs for Justice and a couple of think tanks, the Center for American Progress and Demos.

The campaign has broad goals, including highlighting the role Wall Street has played in financializing student debt products. But Nelini Stamp, youth outreach director for Working Families, tells BillMoyers.com that it is part of a larger battle over education in America from pre-kindergarten up. Below is a lightly edited transcript of our discussion.

Joshua Holland: Tell us about this new campaign.

Nelini Stamp: Last week, groups gathered in Washington, DC, and across the country — more than 10 actions in 10 states — to launch the Higher Ed Not Debt campaign. Working Families is one of dozens of groups involved — it includes national and state-based youth groups, labor organizations and grassroots groups that are trying to tackle the student debt crisis and make higher education affordable.

This campaign has a special message to me, because I was never able to go to college. I didn’t go because when my mother and I applied, we found out that financial aid applications didn’t recognize my mom’s same-sex partner. And I would have been a first generation college student, and we didn’t really know how to navigate loans. So this is something that affected me eight years ago and is still affecting people with the increasingly high burden of student loan debt.

Holland: What are you looking to accomplish, legislatively or otherwise?

Stamp: The Higher Ed Not Debt Campaign has a couple of goals, and one is to tackle the existing $1.2 trillion of debt held by 40 million Americans and to provide relief — a lot of people don’t know there are relief options out there, like income-based repayment, or pay-as-you-earn.

We want to make quality higher education more affordable, as well as accessible, because we believe that higher education is a public good and no one should have to struggle under the financial burden of going to college. And we are working to combat the privatization of higher education and confront the role of Wall Street in the compounding student debt crisis.

Finally, we want to spark a conversation around civic engagement and political participation among young people, as well as older people. I believe around 30 percent of student loan debt is held by people who are over the age of 30.

Holland: Let’s get beyond numbers. How is this issue affecting people who are trying to enter the workforce?

Stamp: The problem is multifaceted. Look at buying a house or a car. Student loan debt is affecting those sales, because if you’re still trying to pay off a loan or two, how are you going to pay for a home? How are you able to own a car to get you to work?

Because of the job market a lot of young people who graduate out of college are finding themselves in low-wage work, or finding themselves in unpaid internships, and are not able to pay back those loans. And when people take out private student loans — there are private and federal student loans — private student loan interest rates can be anywhere from 9-12 percent. That adds up to significant money that could be used for saving up to buy a house or a car, or for rent — it could be used for so many other things that could put those dollars back into the economy. Instead, we’re paying off debt.

And right now, as we speak, at least seven million out of the 40 million borrowers in the US are in default [on their student loans].

Holland: Several factors contribute to the rise in tuition costs, but the leading factor is cuts to education spending in state budgets. We finance higher education through a blend of tuition and federal and state money. It’s easy to sell people on cutting their taxes — everybody wants a tax cut, but then you have to understand that there’s a price to be paid, and it’s being paid by young people coming out of college with this mountain of debt.

The Oregon Working Families Party is pushing a bill called Pay It Forward. It’s being considered in several states. Can you tell us a little bit about that?

Stamp: At Working Families, we are doing our best to elevate innovative policies at the state level. And in Oregon, students at Portland State University, with guidance from a couple of professors — Barbara Dudley and Mary King — were looking across the country for solutions and found Pay It Forward. Those students decided to lobby their legislators, and last July Oregon passed Pay It Forward unanimously in the state legislature.

Pay It Forward allows students to go to college tuition-free — you pay no tuition up front. And then you pay a certain percentage of your income every year after you graduate for a certain amount of years. This removes the barrier of access, and instead of paying to the Wall Street banks, you’re paying to the state.

And it sparked similar proposals in more than 15 states across the country.

Holland: Some have criticized this idea as being too modest given the scale of the problem, in part because it would take several years to get enough funding into the system to have it be self-supporting. Another criticism is that Pay It Forward is a retreat from something more ambitious like full public funding of higher education. How do you respond?

Stamp: For years, we’ve been fighting for more funding for higher education and we’ve been getting cutbacks and more cutbacks. In 2010, Oregon cut financial aid by 75 percent. So students in Oregon are in a dire position. Pay It Forward is not necessarily the way to go for every state, but we believe that in states that continue to cut back, we need a forward-looking solution. We can’t just continue to fight against cuts or to fight for tuition freezes. We need to fight for a bold vision — like debt-free higher education. Free higher education is a goal for us and for many of our allies. But I think right now, we saw a way to implement a program that has gotten other states to think about what a world with debt-free higher education would look like. Because right now, we’re just continuing to get cuts every year on the state and local level.

That’s why we decided to move forward with Pay It Forward. And, again, we’re looking at a lot of different options here. We also know that we need to help borrowers who are now paying back $1.2 trillion in loans. So Pay It Forward is just one step and it allows us to think about a debt-free future.

Nelini Stamp Tells Bill About Occupy's Goals in 2012

Holland: Let me shift gears. You spoke about the privatization of education. Working Families is very engaged in New York. Can you give us some insight into this battle between the de Blasio administration and Eva Moskowitz? Who is Eva Moskowitz?

Stamp: Eva Moskowitz has been a big proponent of charter schools. She was a former city council member who now runs the Success Academy Charter Schools. And recently, she has been caught in this battle with Bill de Blasio over the co-location of charter and public schools. De Blasio allowed most of her co-location schools to be approved, except for three.

Recently, while de Blasio was having a rally for universal pre-k, which Eva Moskowitz had said she supported before, Moskowitz decided to do a pro-charter school rally, and she closed down her 22 schools and turned her kids into political props for a rally. Imagine if public schools did that — if we shut down all public schools so they could just lobby for universal pre-k? It would be an outrage. But charters are public in that they’re funded by public tax dollars.

Holland: The fight over charter schools seems to be one that doesn’t always fall along the usual political lines. Many African-Americans are in favor of charters. Does that make it more difficult for progressives to tackle this issue?

Stamp: There’s a reason for that. Just like we’ve been doing in higher education, we’ve been privatizing public schools and we’ve been cutting teachers, teacher salaries. So it’s understandable, because a lot of African-Americans live in lower income neighborhoods and they’re the ones that are targeted by charter schools. And they are seen by many as a solution and an alternative.

I do believe that it makes it a little bit difficult, but I think the bottom line here is that we need to show that we’re fighting for something like free universal pre-k, something that will help everyone, low-income parents, African-American families — we need to fight for that.

Holland: Where does the campaign go next, and how can people get involved?

Stamp: People can get involved by visiting Higher Ed, Not Debt website, the Working Families website, as well as visiting UPKNY.org. And people should sign petitions, come to rallies, write letters to the governor and support Mayor de Blasio as he fights for free universal pre-k.

Joshua Holland is a senior digital producer for BillMoyers.com. He’s the author of The Fifteen Biggest Lies About the Economy (and Everything Else the Right Doesn’t Want You to Know about Taxes, Jobs and Corporate America) (Wiley: 2010), and host of Politics and Reality Radio. Follow him on Twitter or drop him an email at hollandj [at] moyersmedia [dot] com.
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  • Anonymous

    I would be happy to vote for a tax hike to support K-12 and higher ed. if teachers agree to meaningful pension reform–such as having all new teachers get 401K plans. Otherwise any tax hike will go to pensions like Prop. 30 did in Calif. CalSTRS/CalPERS are in debt $1 trillion, which assures that funding for higher ed. will continue to diminish because the state is permanently broke. We simply need to accept the fact that affordable college is a thing of the past like the Edsel automobile and it’s not coming back.

  • Mike

    You are missing the big picture. Corporate and wealthy interests that have infected our politics since the 1980′s in the forms of tax breaks and loopholes, deregulation, the lack of enforcement of the Sherman Anti-trust act, and free trade are what is ruining our economy and plunging our economy into more debt. Corporate America and Wall Street WANT you to believe that things such as teacher pensions, welfare recipients, and over-consumption by ordinary citizens are the problem. It is in their interest to have people believe this, which allows them to continue to get away with ruining our economy and stealing from the public. Look at the big picture and see how everything is related. EVERYTHING comes back to the greed of Corporations, Wall Street, and the wealthy. And they continue to sell the idea to Americans that they are the good guys, the job creators, the trail-blazers for our economy. This is complete nonsense.

    It saddens me when you say “we simply need to accept the fact hat affordable college is a thing of the past.” Basically, you are saying that “we need to accept the fact that we are getting screwed by a small number of people and corporations, and there is nothing we can do about it.”

    Can you not see that these folks are diverting your attention to everything BUT the real problem?

    Do not simply accept ANYTHING that these quasi-criminals are selling to you.

  • Mike

    And by the way, 401k plans are another scam sold to the people under the idea that you “have more control of your money.” They were never meant to be the sole investment accounts of workers. It is just another way from Wall Street to play with your money and ultimately screw people.

  • Mike

    Sign the petition to prevent the Public Service Loan Forgiveness program from being capped! Support our students and the future of our country!

    https://petitions.whitehouse.gov/petition/retain-public-interest-loan-forgiveness-program-its-current-form-forgiving-all-qualifying-student/wkqnqBCH

  • Mark Naison

    Charter Schools in New York city, have treated public schools as their enemy, encouraging their teachers and students to avoid so much as speaking to their public school counterparts when they are co-located in the same buildings, and constantly attacking public schools in the media as “failing institutions.” They have chose this role to get huge financial contributions from enemies of public education who stand to profit from school privatization. Yet no where is their evidence that charters out perform public schools when they enroll the same student population. This is pure opportunism. Charter schools were originally formed to enhance public education. Now all to many seek to destroy it- in alliance with the wealthiest people in the country

  • kath

    at the very least, stop charging interest on student loans!!!!

  • yourstruly

    Currently, higher education can only promise debt. Perhaps we should hire people to go to school?

  • D. Scott

    Connecting the dots between ALEC, so-called educational “reform” groups like Lumina Foundation, and accrediting agencies like the ACCJC (Accrediting Commission for Community and Junior Colleges, an enforcer of new educational standards pushed by corporate interests), is the subject of a recent op ed in Etc. magazine, “Follwing the Lumina-ALEC Two-Step” at:

    Last July, the ACCJC threatened to shut down San Francisco’s community college (CCSF) by yanking accreditation this July, which led to a precipitous loss of enrollment and associated state funding, and revision of policies so that students must pay tuition up front, under threat of bad credit reports, an enrollment obstacle for many. (Tremendous push-back by faculty, staff, and the community the college serves, as well as weak response of key state Democratic players, is the subject of other articles in this CCSF magazine’s Fall 2013 issue.)

    CCSF journalist Greg Zeman notes how Lumina has given a hefty sum to ALEC ($300,000) and in 2012, granted $450,000 to the ACCJC “with the express purpose of implementing” a set of standards produced by Lumina, “without any faculty or public input.” The ACCJC currently has an accreditation monopoly on California and other Western community colleges; Lumina’s standards echo a corporate-friendly ALEC model bill, while leaving enforcement of these standards to the ACCJC.

    CCSF’s democratically-elected Board of Trustees (BOT) was suspended last July and an all-powerful “Special Trustee With Extraordinary Powers” (STWEP) installed after the ACCJC threatened to revoke accreditation, following a battle in which it successfully lobbied for state passage of these standards. Now, several state legislators are developing bills to break the monopoly of this private accrediting group (not accountable to government or public pressure) and restore democratic control of this public institution.

    Meanwhile, CCSF students sat overnight yesterday (several were beaten and arrested) to demand that the STWEP step down, the BOT be re-instated, and the policy demanding payment of debt up front be ended. Yesterday’s arrests foreshadow the introduction, scheduled for this afternoon, of a city resolution urging the state community college chancellor to remove the STWEP and restore public oversight of this embattled institution. Variations on this privatization battle, and its links to student debt, continue to unfold nationwide, as students stand up for — and sit-in for — their right to public higher education.

  • D. Scott

    Please note correction re my previous comment:
    End of first paragraph should read:

    “Following the Lumina-ALEC Two-Step” at:

    First line of last paragraph should read:

    “Meanwhile, CCSF students sat in overnight
    yesterday…”

  • Anonymous

    I hear a lot of talk about “socialism would make us all equal- equally poor!” and “its just jealousy, they want to punish success”. But then these same folks think I should be jealous if some sector of the work force is getting pensions, and that the solution is to take away their pension. Its BS. This country in total is more productive than ever, more wealthy than ever. The folks at the top can still afford to offer pensions, we simply lack the courage to demand it of them

  • Anonymous

    Mike, you better hope that those corporations are doing very well and making big profits, because CalSTRS and other public pension plans are invested in those corporations. If the stock market falls (and it’s only a matter of time until the next bear market) then big budget cuts to schools and higher ed. will follow. CalSTRS assumes that the money for pensions will come from investment gains on the pension money, and it assumes a Bernie Madoff 8% gain on its investments every year. It is so desperate for yields that it invests 15% of its fund in hedge funds and private equity, for which it pays Wall Street a billion dollars a year in fees. Actually Wall Street loves db pensions, because public pension funds are heavily invested in PE. Like Warren Buffett says, most people don’t understand how pensions are funded or how the money for pensions comes from stock market investments.

  • Anonymous

    What public schools really have to worry about is unfunded pension liabilities–such as CalSTRS $166 billion of debt which grows a million dollars an hour. Pensions will soon be a bigger issue than iPads, Charters, or Common Core. CalSTRS will be broke in 30 years and at that time school districts will only have money to send out pension checks. Pension-related budget cuts have already destroyed schools in Philly and Chicago, Gov. Brown and the legislature say they will try to deal with CalSTRS’ debt this year but any solution will involve more money coming from not only taxpayers but from school districts, which means less money going to classrooms. In NYC Bloomberg has warned of the huge pension obligations that future generations will have to deal with–but providing teachers with unaffordable pensions is all “for the kids”–right?

  • Mike

    I’m all for corporations and wall-street and businesses doing well, just not in a monopolistic and socially and economically irresponsible way, which is what has been happening since the 1980′s (and also leading up to the Great Depression.) The principle driver of an economy is demand for goods and services, and that demand is falling because people are making less and less money and the jobs are not coming back. And the reasons for this are the things that I mentioned above.

    Yes, I do understand that they rely on gains on long-term investments, but the bankers are still up to the same crap that brought our economy into a recession and is preventing us from getting out of it. My point is just that what they are doing now is bring us towards another crisis, and another after that until major changes happen. Systematic changes on various fronts.

    Teachers shouldn’t even HAVE to agree to pension reform, and affordable education should be a DEMAND of the people.

    The wealthy and corporate elite rip us all off, hide their money in tax shelters, ship our jobs overseas because of free trade, and then sell us this “teachers unions are breaking our state” rubbish.

    I am not disagreeing with you that right now, pension investments rely on the well-being of the markets and business, I am just saying that those are not reasons to continue to allow corporations and wall-street to fleece our country.

  • Anonymous

    Privatization

    Stop pretending wealthy CEOs pushing for charter schools are altruistic “reformers.” They’re raking in billions

    http://www.salon.com/2013/03/11/getting_rich_off_of_schoolchildren/

  • Anonymous
  • Anonymous

    Educational Standards

    Rotten to the Common Core?: On the Subject of Education Standards, Arne Duncan, “White Suburban Moms”…and Bad*ss Teachers

    http://jonathanturley.org/2013/11/24/rotten-to-the-common-core-on-the-subject-of-education-standards-arne-duncan-white-suburban-momsand-badss-teachers/#more-72466

  • Dude

    NBIO – thanks for bringing some fiscal sanity and common sense to the discussion. People just don’t seem to realize that the next financial crisis will be the massive unfunded liabilities that states and municipalities have on their books. Once the artificially low interest rates go away and debt can’t be rolled forward cheaply, the piper will come due. At that point in time the federal government will have to decide how much they want to back stop the various state governments and there will have to be, in general, a quantum change to the public pension model. Taxes will be increased, unions will have to make major concessions and state governments will be forced to be more fiscally responsible. In other words, everyone will have to face very painful fiscal realites. Working through the fiscal crisis will probably cause a major recession. The positive outcome will be that the public unions, state governments and voters will finally understand that money does not grow on trees provided by some magic tooth fairy. The crisis is coming. It’s just a matter of time. Meredith Whitney was correct, her timing was just off. Low interest rates postponed the problem.

  • Dude

    “EVERYTHING comes back to the greed of corporations, Wall Street, and the wealthy” I can’t take you comments seriously when you make such one dimensional comments. We’re not in 1968 any more. The next fiscal crisis is going to be led by unfunded state and municipal obligations decades in the making. Every body can pretend that’s not true, but it’s a rapidly approaching fiscal train wreck reality. That only thing that is going to prevent it is if voters and governments and public unions get together and proactively address the issue by dealing with financial facts. Detroit is just the canary in the gold mine. I know it’s shocking to many people that visit this web site, but there is a limit to how much you can tax the proverbial “wealthy” to fund irresponsible government fiscal policy. At one point the horrible banks and big businesses and wealthy people all just move to another place and lots of people are left without jobs and pensions wondering what happened. Take a long look at Detroit. I bet a lot of people there wish the companies and the banks and wealthy would come back.

  • Mike

    It is in the best interest of big business and corporations and Wall-Street to have you believe that it is the workers and consumers that are causing our financial problems.

    The “financial facts” you speak of is that the middle class of America has been fleeced by a small number of people and organizations for several decades. Step back and look around, and you will see it.

    I do not disagree with you regarding the fact that we have financial problems; however, I am not sure that you are understanding the true cause of said problems.

  • Dude

    I suggest you research information on the present value of a typical public worker pension in Long Island, NY and Los Angeles,CA. I think you will be shocked what some of the public employess are getting after only 20-25 years of work. Once you absorb the implications of that information, I suspect your conclusions will become more nuanced and less framed by ideology.

  • Mike

    Yeah, there certainly are some people that are getting pretty sweet deals and taking advantage of the system, and that is wrong. I do agree with you on that. If there is a way to prevent this kind of abuse, then I am for it as well. I have seen some of the numbers, and yes, they are something else There are also people that take advantage of public assistance. However, those numbers pale in comparison to those who do not take advantage of the system and who actually are getting a fair deal and who really need the help. You are talking about “some employees in NY and CA.” What may be happening there cannot be generalized to America across the board. I am just saying that the amount of wealth that has been sucked out of the middle class over the last several decades and that has went straight to the top absolutely dwarfs those numbers. There is a larger problem at work here. It is disgusting. Our infrastructure is falling apart and we do not have the funds to improve it because an obscene amount of money is going to less and less people and corporations, and they hide it overseas, lobby politicians for lower taxes, evade taxes with existing loopholes, and so forth.

    My conclusions about the economic well being of our country at large, however, are not based on ideology. They are based on the data, my personal research of the topics, the research of economists as opposed to what the corporate owned politicians of both parties are selling us, history, and common sense.

    There is a larger problem at work here, and it has been going on for several decades.

    Nice talking with you, though. Open discussions about the issues are what lead to solutions!

  • Hvacrpro

    Here is the Problem with Student Loans… my course was 8k, I took two loans one stafford, and one pell, the pell i didnt have to pay back, the other stafford was 2,500. I got into trouble, my ex was conned into activating the interest rate on my loan when i was in the can…. for a year, i got out and it fkd up my credit, i tried to reason with them, and today that loan is up to 25,000 dollars. how the heck does one reason with these a holes…. i cant even buy a home because of this. so i say screw them.

  • http://www.facebook.com/RPManke.solar RevPhil Manke

    Doesn’t it come down to the income tax codes? In the 1950′s and 60′s the rate for higher incomes was much, much higher that now, and the national economy was booming. ‘Corps’ re-invested in work structure and the USA invested in infrastructure and education, because it was too costly to take high tax proffits.. Also, the advent of digital investing machinery without any tax at all is criminal at best. All stock market trading must be taxed like the rest of commerce is! How stupid in the electrorate to keep crooks in office. It really is that simple.
    …… Big banksters got bonuses and bailouts at the same time! And no one was arrested or jailed. Your govt at play with your future. Stupid! Stupid! Stupod!!!

  • Anonymous

    yes, it’s the EXTRACTED wealth. the entire system is rigged so wall street wins. it’s wrong. they act like we have our 401ks so we’re “winning” too, but all we really have is a piece of paper. the financial crisis demonstrated how tenuous our “security” that we have saved for retirement via these things. banks need to get boring again. our savings should be our savings, not the banks earnings. And school teachers need to make more than wall street banksters. they’re actually EARNING it.

  • Rachel Sun

    My dad had an idea called “dollar for change.” He tossed it around a bunch in the 80′s.

    $1 per week per child in public school could pay the graduating classes nationwide to go to college.

    Kids who could not afford the $1 per week could be subsidized rather easily.

    I wonder if the numbers still work.

    Too easy though huh?

  • Anonymous

    Now you all finally get it. We are working for the company school, the company town and the company nation.