How Activists Are Moving the Dial on Student Loan Debt

Student loan debt has just reached an all-time high of $1.465 trillion. That’s double the $675 billion in loan debt amassed in June 2009, according to a recent report from Bloomberg. With more than 44.5 million people in some type of student loan debt, it’s increasingly becoming part of the platforms of high-profile progressive policymakers.

The national conversation has come a long way in the years since activists started pushing the issue of student debt during the 2008 recession. Now, incoming Rep. Alexandria Ocasio-Cortez is vocal about the idea of student loan debt cancellation and Sen. Bernie Sanders talked about making public college tuition-free during his presidential campaign.

“At first we were regarded as totally unserious as to how the world works,” said Ann Larson, co-founder of the organization Debt Collective. “Yet, less than a decade later, we have Bernie Sanders, some likely presidential candidates, lawmakers, policymakers, scholars and others talking about this.”

The Debt Collective is the most recent iteration of a few grassroots initiatives aimed at tackling debt. The Strike Debt network attempted to mobilize borrowers to go into default to mandate student loan reform, while Rolling Jubilee used $701,317 in donations to buy up and cancel $31,982,455 of student loan debt. Today the organization is centered around canceling all types of debts by collectivizing the interests of individual borrowers.

“Creditor, collection, and loan agencies are incredibly organized in their interests but people in debt do not have any type of institutional backing,” Larson said. “Debtors need a membership-based foundation, organization, and institution that they participate in a very real way to advocate for their interests and provide them with relief at the same time.”

Protections for student loan borrowers — especially in terms of private student loans — are nearly non-existent. Borrowers must deal with unclear lending requirements and shady repayment practices. The nation’s largest student loan lender, for example, deceived borrowers on the terms of their repayment, resulting in illegal increases in principal balance by allocating payments to the interest rather than the principal loan. Borrowers are fighting against an industry based on making money off their debt.

The Obama administration made attempts to increase accountability to borrowers, including the creation of the Office for Students and Young Borrowers under the Consumer Financial Protection Bureau. The office actively pursued enforceable punishment for loan services that intentionally disenfranchised borrowers, and sued CitiBank and Navient  for defrauding borrowers. However, the Office was shut down in May 2018 by Mick Mulvaney, who was acting director of the CFPB at the time.

Organizations like Student Debt Crisis are rooted in creating immediate relief specifically for student loan borrowers. They educate borrowers on how to minimize loans, provide a digital community for those struggling with repayment and work on state-level policies across the country to either partially or completely cancel student loan debt.

Cody Hounanian, the program director at Student Debt Crisis, said that progressive student loan reform requires taking a holistic approach to the impacts of student debt — including looking at existing inequality that determines who’s most affected.

“Student debt amplifies long-term systemic inequality,” Hounanian said. “Students of color attend predatory for-profit colleges at higher rates and default on their student loans more frequently. Women face longer repayment periods, and pay more over time because of the wage gap.”

College education is frequently touted as a means to achieve greater economic and social mobility, especially for people within marginalized groups. But skyrocketing student loan debt instead reinforces existing socioeconomic barriers and limits wealth accumulation for many graduates.

Higher Ed, Not Debt hoped to bring these issues into the national debate when it was founded around four years ago. The D.C.-based coalition connects more than fifty organizations throughout the country to push grassroots work directly into national policy.

The group wanted progressive presidential candidates to use student loan debt as an issue to rally around, like they would with healthcare, Charlotte Hancock says. Hancock is the communications director at Generation Progress, which houses Higher Ed, Not Debt. Now that it’s a topic increasingly on the progressive radar, the coalition is focused on creating tangible solutions for borrowers.

Thanks to the election of Donald Trump in 2016 and an increasingly unfriendly Department of Education, Higher Ed, Not Debt is looking towards state-focused solutions like The Borrowers Bills of Rights. Legislation like this would protect borrowers from predatory loan practices, something Hancock said is especially useful for borrowers who have private student loans.

“The federal loan system isn’t perfect,” Hancock said, “but there are at least protections in federal student loan systems that are not there in private student loans.” Unlike other forms of debt, student loan debt cannot be written off in bankruptcy and some loans can even pass on to another member of a family if the student who incurred the debt dies.

Then there’s the issue of predatory for-profit colleges, brought to the forefront in the high-profile case of the now-defunct Corinthian College. Borrowers have limited rights, even when they’re the victims of fraud, and the current Department of Education under Betsy DeVos has made rollbacks to the already meager regulations that protected their interests.

One example of the cruelty governing student loan policies — DeVos’s Department of Education has approved loan forgiveness for just 206 of the 41,000 borrowers who applied for public service loan forgiveness. Unnecessary obstacles and red tape left those borrowers, who spent a decade working public service careers while making dents in their loan payments, out in the cold. The 99 percent denial rate shows that even well-meaning policies have the power to severely hurt borrowers — hence the push to comprehensively deal with the issue of student debt.  

“The fact that we had student debt at all, especially at the level we have, is a policy error made a few decades ago,” Larson said. “We should correct the error and return education as a status of the public good and not just a good you have to purchase.”