We were told in 2008 that certain financial institutions, certain industries were too big to fail. As the Great Recession sent the global economic system into a tailspin, we were told that certain financial institutions and companies were so large and interconnected that their failure would be disastrous to our economy.
We were then told in 2009 that Congress needed to step in and use tax dollars to save the faltering economy, to instill confidence, to trigger economic growth.
All the while, we have been told since 9/11 that America had to leave its borders, invade Iraq and Afghanistan, as well as bomb other countries, in order to keep us safe from terrorism. We have also been told since 2001 that the Bush-era tax cuts for the wealthy would spur economic growth and there would be a trickle down effect for “the rest of us,” as Cornel West and Tavis Smiley call the non-rich in their new book.
In total, Congress authorized the federal government to shell out $700 billion for the Trouble Asset Relief Program (TARP) or bank bailout, and another $787 billion for an economic stimulus package to cut taxes, extend social benefits, and create jobs in October 2008. Since 2001, according to one estimate, the War on Terror has cost American taxpayers $4 trillion, and according to The New York Times, the Bush-era tax cuts have reduced tax revenues by about $1.8 trillion between 2002 and 2009, the single biggest contributor to the deficit.
When you add all of that up, the money given to war, banks, the rich, and to spur the economy, you are talking about approximately $7.3 trillion!
While Congress dished out trillions in the last decade, student debt rose like a hand from an attentive student in a classroom. A generation of students and parents is staring solemnly at a growing mountain of debt that has now eclipsed the staggering $1 trillion mark. Student loan debt in the United States amazingly passed credit card debt in 2010. About two-thirds of this student debt is held by people under 30 and not all of them even have college degrees. Since 1980, average tuition for a four-year college has jumped 827 percent, while the average student loan debt has leaped 511 percent since 1999. Not surprisingly, bank executives are found on many trustee boards of colleges and universities, probably rejoicing when tuition goes higher, and higher and higher.
The heart-wrenching stories of these debt-laden students have spiraled across the Internet, so there is no need to retell them here. The dismal effects student debt is having on our economy have been discussed elsewhere, from the increasing default rates to its burden on households to what people are calling the “student debt bubble.”
But when we put these pieces together, a story forms with the headline we are losing a generation to student debt. When we put these pieces together, a story forms with the headline that, if we do not do something drastic soon, then the student debt bubble will rupture, drenching and crashing the economic system, as it did when the housing bubble burst. With a dismal job market, we have a generation facing financial meltdown. We have an economy facing financial meltdown.
To save a generation, to save the economy, we need to bail out the indebted students.
If Congress could give the rich $1.8 trillion, then Congress could give indebted students $1 trillion. If banks are too big to fail financially, then our present generation of students is too big, too interconnected to fail financially. If the meltdown of the former could wreck our economy, then the failure of the latter can wreck our economy. If Congress fears terrorists and can justify spending $4 trillion on making America safe, then Congress can justify spending one quarter of that amount on student debt, in fear of losing a generation or melting the economy.
Bail out the indebted students.
Aside from Rep. Hansen Clarke, D-Mich., who recently introduced a bill that would forgive up to $45,000 in student debt after a borrower contributes income-based payments for a decade, and the growing Occupy Student Debt campaign demanding free public higher education, interest-free loans, and a bail out for current debt, few powerbrokers are calling for or even thinking about a student-loan bailout.
Instead, the talk in Congress is how to pay for an extension on the interest rate of 3.4 percent on subsidized federal Stafford Loans, enacted in 2007 but set to expire July 1, 2012. The Republican-led house recently passed a bill that would take money from a program in Obama’s health care law, while Democrats are looking to pay for the short-term fix through taxing the rich.
In an election year, both parties have painted themselves as the party of the student and lashed out at the other party as anti-student. It is truly incredible that both parties are making this pro-student claim through such a small, short-term measure for students.
Do you know how much that reduction to 3.4 percent costs annually? A measly $6 billion, compared to the $700 billion bank bailout.
Was there a spirited congressional debate and conflict over how to pay for the bank bailout? Was there a spirited congressional debate and conflict over how to pay for the bombing of Libya? Is there a spirited congressional debate and conflict over how to pay for the War on Terror?
There is no longer a debate on student debt in Congress as both parties have agreed to support this measly extension. The debate has turned into something else—how to pay for it.
We need to return to a discussion of student debt. We need to find a way to bail out the students, like we bailed out the rich, the banks and the warmongers.
Dr. Ibram H. Rogers is an assistant professor of history at SUNY College at Oneonta. He is the author of The Black Campus Movement: Black Students and the Racial Reconstitution of Higher Education, 1965-1972 (Palgrave Macmillan, 2012).