The Student Debt Dilemma | CBS Reports

there is now more than 1.7 trillion dollars in student loan debt and this isn't just some sort of you know young person millennial issue this really touches every facet of american lives both individuals their communities our economy and our country [Music] in god's name why are we punishing millions of people because they chose to get an education that makes no sense another day older deeper in debt is how i feel it feels like this huge thing you'll never i'll never get out from under one of the things that scares me is becoming a parent i just don't see how that's possible with having a student loan debt hanging over my head the idea of student loan cancellation is not something i ever thought would be on the national policy agenda this is hugely mistargeted to the people who probably need the help the least i do not think student debt forgiveness is a good policy if we were to cancel student loans we are basically making a decision to provide relief now and have some future generation pay for it later this would be a moment for the federal government to say we had a great idea it started out with the best of intentions and it it went off the rails it is time for us not only to ask for forgiveness but to extend forgiveness [Music] i'm from mississippi i grew up in a small town the population i think around that time was maybe 1600. growing up i felt like nothing could stop me nothing could stop us my father served in the united states army in the national guard he actually went to iraq my dad because he was in the army had two jobs he worked in the factory and was in the national guard my mom worked in the factory for 20 years that factory closed until then she pursued nursing typical middle class family whatever i wanted i pretty much got so i felt like my parents were rich it wasn't until i went to college that i realized that that was not the case when i became exposed to what i guess being middle class really meant my parents made you know too much money for assistance but they didn't make enough money for them to be able to just write a check and pay for school and so loans were really my only option [Music] i went to delta state majored in accounting did very well but then the financial goals really hit me every semester i would you know find myself in a situation where the semester would start i would need to buy books i didn't have the money the first semester i tried using my credit card that worked out okay but then i those credit cards you know those bills had to be paid and so then i got caught up in credit card debts and so i realized that you know i can't keep doing this this is a cycle that i don't want to be in and so i decided that you know maybe going to college right now is not the best choice for me maybe i need to work save some money and then go and get my degree i feel that the student loan debt my student loan debt personally is very crippling all in all for every attempt of getting my degree my current balance is north of 30 000 then when you graduate and you look at the balance or you in my case you don't graduate but yeah you still have these student loans that you're responsible for i know that i've made a few payments you know a lot of times i've had to defer just because it's either make these payments or pay my rent and of course you have to have a roof over your head one of the things that scares me is becoming a parent i just got married last year and my wife is on me like hey you know i'm ready are you ready and so you know one i would love to be a parent but then i look at the cost of child care and i look at my student loan balance and it's like then i'm still going to be balancing do i make my student loan payment or do i paint child care you know and i don't want to default on my student loans but at the same time if i'm going to become a parent i want to make sure that my child has the best life possible and i just don't see how that's possible with having a student loan debt hanging over my head student loan debt is crushing more and more americans some wondering is a college degree worth the price one expert says college debt is a ticking time bomb that could have devastating effects the higher costs of higher education is creating a stranglehold on mobility for some and many say it's only getting worse we often hear about you know the student loan crisis just in terms of these enormous balances but you really have to think about the impact this is having on individuals and our country and when you dig deep it's truly petrifying every 26 seconds of every single day a student loan borrower defaulted and that's even before the pandemic ever hit this impacts their ability to get a mortgage access credit uh maybe even to get a job and you know that just scratches the surface of the impact that this debt is having there is now more than 1.7 trillion dollars in student loan debt there's more student loan debt than there's all car loans there's more student debt than there's all credit card debt in america so for the last decade i've been traveling the country talking to people of all walks of life about student loans and one of the things that has really stuck with me is how the student debt crisis is really a quiet crisis you know maybe unlike the mortgage crisis where you know you could see down the street there you know used to be a house owned by your neighbor that's now owned by the bank you know there isn't this visual tangible thing you could see when your neighbor defaults on a loan or your neighbor struggling to you know save for retirement because their student loan bill just never seems to go away and i think that has also hampered our ability as a country to actually tackle both the root causes of this crisis and the fallout it's had on american families to truly tackle this problem you know we have to think about it holistically it's making sure that the next generation doesn't face the burdens that this generation has it's helping borrowers with student debt now against the predatory industry that has targeted them for far too long and yes it includes eliminating and reducing some of the burden that student loan borrowers currently have the push to convince president biden to wipe out student loan debt for tens of millions of americans is gaining momentum we cancel 50 000 worth of student loan debt and what that will mean is that 85 of those who are struggling with student loan debt right now about 40 million people will see their student loan debt completely wiped out the stroke of a pin president biden can provide relief to tens of millions of families across the country close the racial wealth gap and set our nation on a path to a long-term just equitable recovery [Music] i do not think student debt forgiveness is a good policy this could be a very serious moral hazard problem and when i say moral hazard what i mean is for people who are thinking about taking out loans and thinking about how much in loans they should take out they're going to be looking at the fact that a bunch of people just got their loans canceled it seems deeply unfair that someone who borrowed loans yesterday gets cancellation and someone who borrows tomorrow doesn't and i think people who borrow tomorrow will make a very compelling argument that they should also have their loans forgiven if we were to cancel student loans we are basically making a decision to provide relief now and have some future generation pay for it later that's particularly egregious since we're also saying we're not going to change any parameters of the student loan system so we'll have just as much debt in the future and people will be paying taxes to pay for these previous policies when we're thinking about policies when we're thinking about trade-offs what's the best way to use the next dollar to use the next taxpayer dollar we want to have the maximum effect and i think that we should be considering policies that can help people at the lower end of the income spectrum especially now those tend to be the people who didn't go to college who didn't take out any debt [Music] i think the first thing i always like to point out when talking about student loan cancellation is that it's a solution that ignores the solution that's already in place the student loan safety nets that are already existing called income-based repayment and public service loan forgiveness those programs alleviate unaffordable monthly payments to people who have a low income maybe they have a low income because they didn't finish school or they finished school but it didn't serve them for some reason and so in those cases the benefits of a lower monthly payment and ultimately having your debt forgiven those are given just to the people who did not see a big return on their schooling the problem is we never had a point in time where we stopped and wrote new legislation that said we want all borrowers to be eligible that for that sort of benefit instead what happened was through a patchwork of executive actions and bits and pieces of legislation here and there we ended up with a cobbled together universal safety net for student borrowers so while every borrower in the country does have access to income-based repayment and this potential for forgiveness in the future that's through a variety of different programs the programs have different parameters and not surprisingly it's really challenging for people to navigate these programs education on average is still a very good investment so even though people are borrowing a lot to go to college to go to graduate school for the most part in the long run those people are better off financially even with that debt than they would have been having not gone to college and just been stuck earning the wages that are generally available to people without higher degrees so when you think about how well does a widespread cancellation or jubilee event serve the country the challenge is that it gives a lot of benefits to people who are already doing quite well in this economy [Music] i was listening to the radio and hearing a lot of talk about student loan cancellation the reasons against i was hearing was that it would mostly benefit higher income earners people with advanced degrees who then earn more money because of their advanced degrees which i mean i'm not an economist but in some ways that makes sense but the first thing that came to my mind is well that's not true for teachers good morning lorena thank you for being early we're going to be in a pear deck today we've experienced wage stagnation you know in the last few decades adjusted for inflation or which in some places our wages have gone down it felt like we were all being loved together with doctors and lawyers and i can't speak for them i don't know maybe they have a hard time paying too but i just know my experience was just that i was i don't feel that my advanced degree put me in a better position to pay my loans back it just i feel like my advanced degree dug me deeper into debt monday is period one it's going to start in 10 minutes you guys have enough time to take a stretch break and get a glass of water i started school in 2014 so i took out 50 000 of student loans and i finished my master's program in 2016. i'm doing the income driven repayments which is like really the only way i can afford to make them and i've paid off nine thousand dollars of the loan but only of the interest i've only paid 97 dollars in principal so if i was doing the standard repayment i think it would be about 600 a month but that's not an option for me financially so i do the income driven which it depends on the year it's either like 2 20 to i think i've paid as much as 280. but because i'm paying less the interest accrues more so it just it just feels like quicksand it feels like this huge thing you'll never i'll never get out from under that's the one that kills me because i've it's been you know a couple months shy of five years of making payments it was for me at that time the scariest thing i'd ever done in my life was to take out 50 000 worth of student loans the only reason i was able to justify it to myself was one i would i would always have a job it's a very secure profession and two you know i was like well there's teacher loan forgiveness right now we have a states have patchwork of loan forgiveness the federal program is laughably inadequate for most subject areas if you teach five years at a high needs school you get five thousand dollars for given if you teach in a subject area that they need teachers if you teach math science or special ed that's 17 500 but still like five thousand dollars is a tenth of the original loan balance i had so teacher loan forgiveness as it stands is kind of it's almost like it feels like an insult and also if you accept that loan forgiveness for those five years it does not count towards your 10 years of public service loan forgiveness so one of the things that we understand now better than we used to is that when people are making financial decisions there are lots of ways that those financial decisions get manipulated and so when you see debts rising really quickly and when you see people suddenly being more and more willing to take on some risky debts you have to ask yourself the question uh why and so it's not that people are are sort of ignorant or they sort of lack a sense of self-control this is not a payday lender um and this is your federal government and this is a federal government that's told you that this is not only good for you but good for the nation i you know i think uh part of it is that we sometimes forget our the origins of these deaths it was called the national defense education act in 1958 when we were responding to sputnik and saying you know this is a national priority and then in the civil rights movement we then said this is a priority for equity and inclusion and racial justice and so when people are responding to their federal government because you know we trust at least we we we hope to trust our federal government and they're responding to something that's supposed to make their lives better then they're more willing to take on those debt if you go back to 1975 it was really different in the 1970s roughly 12 percent of students use student loans and their amount of borrowing was lower and in the 70s what we also did was we had a system where we used pell grants which are a grant aid to students to support not just low-income students but also middle-income students so that almost anybody could go to college debt-free but then in the 1980s the reagan administration in congress stopped paying adequately for pell grants and we went a decade where students had trouble finding money to go to college and so at the end of the 1980s a set of financiers and bankers said you know we've got a solution instead of using grants to pay for college for most folks we could use loans but if we're going to make the loans in order for us bankers to make those loans we actually need the federal government to give us a subsidy for that so that we'll be guaranteed to make money on those loans even if students find themselves unable to repay and these big changes that they were pushing got adopted by congress in 1992 and signed into law and implemented by the first bush administration and the clinton administration and so between 1992 and 1994 congress and the federal government radically increased eligibility for student loans and they increa they doubled the amount that students could borrow while in college and so we went from having about 20 billion dollars in student loan borrowing every year in the 1980s to having 120 billion dollars in borrowing per year at its peak but there's a twist and the twist comes in 2010 when the obama administration says hey wait a minute why are we paying this subsidy to banks to make these loans we could just make the loans ourself as the federal government by cutting out the middleman we'll save american taxpayers 68 billion dollars in the coming years we could use the savings to make interest rates on loans lower for students and we could even use some of the savings to provide more grants like the pell grant for higher education and so in 2010 as part of legislation passed by congress congress and the federal government stopped giving that subsidy to banks and the department of education started making the loans itself which in some ways is better but at the same time this put us on a course where the us department of education effectively became the largest commercial bank in america in 2017 with almost a trillion dollars in outstanding student loans in its portfolio and we haven't seen student debt go away as a problem since then it's only gotten worse i think it's fair to ask the question do we really want the secretary of education to be effectively the ceo of the largest consumer bank in america unfortunately what we have seen time and time again is a range of mismanagement incompetence and even you know nefariousness when it comes to how the department actually manages the debt on behalf of tens of millions of people and we've seen how student loan companies for-profit schools student loan debt collectors will get every leg up will cut every corner often with no accountability no standards and no repercussions when they rip off borrowers we also see how the student loan industry targets particularly communities of color and borrowers of color we've seen cases about how for-profit schools engage in you know redlining practices particularly offering worthless degrees into the hardest hit communities we see how student loan servicers will fail to get borrowers of color into critical consumer protections leading them more prone to delinquency and default and this happens over and over again where it's not only more debt it's how the student loan industry drives needless interest fees predatory products that just makes the student debt crisis even worse the other thing to keep in mind here is that there were a lot of colleges that were seeing their expenses going up and the one thing that they could count on was the fact that the demand for education was not going to go away so long as the federal government's backing those loans and you've got this really a robust market to provide those loans whatever your expenses are or what they are the students will still come and that is exactly what happened i mean they and they and they have come into sort of situations where there are some beautiful dorm rooms now across all these colleges great athletic facilities etc but at a very high cost [Music] but the other uh sort of thing that we sometimes forget is while the cost of college has skyrocketed the incomes that people are earning has not and also realize that if you happen to be black or or latinx you're likely to start your career at a lower starting salary even in the same occupation these disparities didn't just magically occur they are the consequences of generations of systemic racism discrimination and what i call policy violence that is systemically denied black and latinx families the opportunity to build wealth forcing our families to take on greater rates of student debt for the chance of the same degree as our white counterparts having grown up in south carolina the one thing that i would hear over and over again as a young black kid was get your education it's the one thing they can't take from you and so you were supposed to do whatever it took and the family was willing to do whatever it would take in order for you to you know get your education which [Music] required so they both got the same education and if we think about this in terms of like how much it cost uh to purchase a car one of them got that education and only had to buy one car the other one got that education and had to buy two cars and is discovering that uh the education isn't doing quite as much for them on the job market though it does something for you on the job market but not as much as it does for your white counterpart and so you see this gap opening up so after leaving delta state i decided to move to virginia to pursue [Music] europe [Music] immediately i felt a sense of relief because being accepted into the program reminded me that i still had what it took to be successful i still had what it took to achieve the goals that i had set for myself and that sometimes it's okay to look at different alternatives to achieve those goals and that college is not the only solution you know i've been with the same company for eight years i started off as an intern they promoted me to or hired me as a junior engineer and then i was promoted to a senior engineer and now my role has changed completely and i'm a scrum master i feel that i don't need a degree in order to one continue to work or to even be promoted at this point for me if i do the math 10 years i will have paid 30 000 in loans so that's that's money that isn't going to my retirement it's not going to a mortgage i'm not accruing any you know equity or interest on that it's just money that's gone but with my students i really stress like having a plan you know like i think we have moved away from this kind of like pollyanna like just take out the loans it'll be fine i think we really help them at our school like pursue the scholarship opportunities you know pursue these different routes and we really are very frank with them while it's not the right route for every single student i think for the vast majority of students i do still recommend it and that's it that's all the time we have goodbye you guys bye happy birthday again maria goodbye miriam goodbye emanuel i think we're at a place in american culture where we have been made to believe that having a college degree a bachelor's degree or above is somehow part of the american dream and that without it we're a failure you know we we are celebrating education so much in this country which is wonderful because we want people to get education so that they can provide more for themselves provide more for their country and that's great but not everyone needs a degree we know that students are signing on the dotted line without knowing what they're signing up for and we see more and more that parents even middle class parents are are signing and saying okay i'll just cover the rest with my own personal debt and it's debt that they can't afford there's no silver bullet for a 1.7 trillion dollar crisis and we really need to tackle this from all angles you know we need to enhance the consumer protections so student loan borrowers are no longer you know second-class citizens being forced to deal with abuses that people with a mortgage or a credit card don't have to face we need to improve the department of education to ensure that they're actually doing a much better job overseeing these programs we have to make a college more affordable for the next generation so we're not just dealing with it with this you know in another five years and on the table needs to be reducing cancelling the debt for millions of people across this country who have been held back because of it there's a cost of forgiveness it depends on the cancellation policy being proposed but it's either hundreds of billions of dollars or up to a trillion dollars that cost adds to the federal debt so ultimately taxpayers are responsible for the federal debt the other thing i think we have to think about is there is an upper limit to the amount the federal government can borrow we obviously haven't reached it yet but there's an upper limit and so if we cancel a trillion dollars in student loan debt when the next crisis comes will we have as much ability to deal with that crisis as we would have otherwise part of this is just recognizing the humanity of debtors recognizing that they had ambitions when they took out those debts to go to college and asking ourselves what would happen if they got a fresh start we give fresh starts to people who are who make lots of money you know when the banks start to fail they get a fresh start if we want to right the wrongs of the student loan problem one of the ways to write that wrong is to say sorry we messed up this would be a moment for the federal government president biden to say we had a great idea it started out well in with the best of intention and it it went off the rails so because we messed up it is time for us not only to ask for forgiveness but to extend forgiveness [Music] you

Channel: CBS News

Views: 205,470

Keywords: student debt, student loans, student debt documentary, cbs news, news, documentary, loan forgiveness, student loan debt, cbsn originals, college debt, student loan forgiveness, debt relief, college, grad school, debt crisis, student, cbsn documentary

Id: alS0XVda8rM

Length: 28min 38sec (1718 seconds)

Published: Thu Mar 25 2021