A Student-Debt Researcher Fucks Me Up With America’s Broken Promises

Something you may have noticed over the past year is this damn pandemic they've got going on and the way it is absolutely demolishing the economy. Something else you may have noticed is the federal government rolled out one single half-a-loaf stimulus and relief project, back in the summer, and then decided it had no taste for such things and left the rest of us to panic and thrash around and suffer. What sucks is, this is the United States functioning as intended.

It is a machine that by design works away from the best and broadest benefits in order to locate the least politically destructive way of producing the most profitable outcomes for an ever narrower set of people with control over the levers. When our government heaps unfathomable resources—the kind of "stimulus" that can actually be tracked in a bank account—on investors and magnates and international corporations, and then comforts you via platitudes that this will eventually accrue in your favor in opaque, nonspecific terms, what it is saying is, We appreciate your patience while we work diligently to refine the status quo to allow for the maximum amount of degradation and cruelty.

This is why student debt cancellation, as formally proposed by Ayanna Pressley and Ilhan Omar back in March, and then informally proposed by Elizabeth Warren and Chuck Schumer in September, is an intriguing concept. Americans carry an astonishing $1.7 trillion in student loan debt. Overwhelmingly this debt is held by working-class families; increasingly this debt is held by black and brown people who are subject to all the racialized horrors of our society and as a result are far less likely to ever either be free of student debt or derive real material benefits from having taken it on in the first place. Researchers have carefully tuned and pegged their proposal—currently up to $75,000 per borrower—not to address white upper-middle-class millennial angst, but specifically to the systemic disadvantaging of already-vulnerable groups.

It's fascinating to be presented with a nuts-and-bolts policy proposal that works in this general direction and operates in explicit terms. The theory is, yes, wiping away more than a trillion dollars in working-class debt would function as relief, and yes, as an economic stimulus, but it would also be a massive experiment with what we could inadequately but neatly describe as trickle-up economics. In satisfyingly direct, literal, material terms, it would lift whole huge blocks of the population immediately out of negative household worth, without those individuals needing to spend one single additional second of their lives groveling or grinding or gig-working their way to an early grave. For once, it's a proposal that says, Instead of pretending that second- or third-order effects of stimulus will pull vulnerable people out of dire circumstances, let's just actually do that.

That's one of the real mind-palace-expanding takeaways from a working paper published by the Roosevelt Institute in August and then updated in October: These proposals aren't arbitrarily identifying student debt as a mode of stimulus. They're zeroing in on student debt as a result of observations made about our labor market, our whole concept of debt, and the way that ruthlessness and excess among the wealthy and powerful resolve as back-breaking burdens for the most vulnerable. To them, this is as much a corrective as it is a stimulus, and it's also a really fucking tantalizing stimulus!

But it fits into a fairly complex picture of a nation with a really fucked-up relationship to debt, and in order to make the most sense of it you really do need to zoom out a little bit. To help with that effort, I spoke to Dr. Louise Seamster, who along with Raphaël Charron-Chenier, Tom Shapiro, and Laura Sullivan, was one of the researchers and authors of the Roosevelt Institute's working paper on student debt cancellation. Dr. Seamster is an Associate Professor of sociology, criminology, and African-American studies at the University of Iowa, and she has been studying and writing about debt for a long time, focusing more specifically on student debt since 2015. This interview has been lightly edited for clarity and length.

So, when did it become a thing that higher education is funded via personal debt? Has that always been a thing?

No, that was a big change, it really took off starting in the 1970s. And people who have been tracing the history more than I have tie it to the rise of more neoliberal economics, generally—the idea of tying what we used to think of as public goods to personal responsibility, and taking things on yourself. So just like we've individualized things like healthcare, or what's happened with public housing, or public education at the K-12 level, there's kind of a similar shift from a system of funding public institutions of higher education at the state and federal level, to instead financing higher education through debt that a person takes on.

A lot of what I think is important about that shift is that it coincides not only with this larger neoliberal shift in thinking, but also with a period in which people of color were finally able to access these institutions. And I don't think that's coincidental (and it's also the same for women, incidentally), as these educational institutions finally become more democratic, it's like, “Sure, now we’ll pull the rug out from under you, you can pay your own way. Welcome!” 

That is what I've been studying for a long time, is this shift in how we think about public goods themselves. And how the way we think about public goods shifted as different people got access to those public institutions.

I tend to think of contempt for the working class being smuggled into policy behind a lot of Margaret Thatcher-y bootstrap stuff, but in this case it sounds like specific contempt for women and people of color being smuggled in behind the standard contempt for the working class.

Yes. And, like, you warned me that these questions would be dumb, but I actually don’t think this is dumb, because I think that I have only gotten this far by asking what might seem like dumb questions, because we’ve normalized this as just how we pay for higher education. And yet so many other countries actually fund their universities. And it kind of takes being willing to ask dumb questions to be, like, “Whyyyy don’t we do that?” 

A lot of the solutions that we have, currently, are still about tweaking the way that individuals have to fund their higher education. I have had to become comfortable with sounding weird by saying, like, “What if we instead funded the institution of higher education and not the person, like we do with K-12?”

I’m glad that you have established that it is not dumb to ask that question, because my very next question is, uhh, how do they fund higher education in places where it is not done via personal debt?

Well, in plenty of places in Europe, and (for example) in India, the government funds the school primarily. So the student often pays a nominal fee, like a couple hundred dollars a semester, for tuition. Just like it used to cost here, a couple hundred dollars a semester at a state school. The rest of the costs are covered. You may not have all the bells and whistles of a current state school like the one where I teach, but people have pointed out that to some degree, those bells and whistles that people love to hate at higher education places are often themselves part of this larger system of how we're paying for higher ed, where schools are having to compete for customers, rather than serving the people who live in their state. 

Like at Iowa, something like half the students come from out of state. So in order to convince someone to move to Iowa City—instead of any of the other places they could go—they have to try to entice students and their parents to pay this high tuition. So it's this race to the top, where the U.S. News & World Report college rankings actually set the terms of what makes a good school. And it is not the quality of the education, it's not people like me. It's whatever fits into the algorithm that produces these rankings. And so then colleges start doing more of those things. 

I feel like this system of financing debt touches so many other things that we don't even think about, that we might say are problems, whether it's, like, extreme student stress-levels or, uhh, why do we have all these climbing walls in the gym? I think the debt story is something that all of these things have in common.

That phenomenon—of state schools coordinating lavish sales pitches for basically anyone willing to take on tens of thousands of dollars in debt—seems related, at least aesthetically, to the phenomenon of athletic programs making grotesque upgrades to their facilities basically as a way of dumping surplus cash.

Yes, exactly. I think that's really important, too. To the degree I just blamed climbing walls, this isn't about blaming students and their highfalutin' tastes! This is about contractors and developers and the financing industry setting the terms, and they want to spend and make big money off of contracts. It could be anything—like, the, ah, lazy rivers don't matter, except as far as they’re something to spend money on. 

That is where my work in other forms of debt comes in, is in looking at the way that we've financialized things more generally and seeing that this is not unique at all to the higher education world. We've had this shift, where you shift to thinking of students as a consumer, and also as kind of a mark. Because it's about getting their cash, collecting their loan money. It’s not about what happens to them afterward.

And this is tied to the way that colleges themselves become indebted. So we talk about their huge endowments—Iowa, for example, has an endowment of over a billion dollars. And they're shifting in their purpose, in their major function. Like, we may see them as higher education places, but clearly the people who manage their endowments think of them differently. Iowa just made a deal last year, it sold management of a coal plant it owns, which is right downtown, to this French company, on a 50-year contract. For over a billion dollars outright! Supposedly they're gonna be converting it to cleaner energy sometime soon, but I don't know that we have a say in that anymore! The university is getting sold and stripped for cash and parts just the same way as cities are, and some of our major institutions. Because even with its huge endowment, UI still has a very significant amount of debt. 

It's very normal now to be highly leveraged. I think this is one thing that we haven't talked about very much, which is, when you have universities that have a lot of debt, they have already sold off the student revenue that they're going to be making for a while, probably a period of decades. That's not just tuition money! The University of Georgia system got in trouble because journalists found emails between the Board of Regents and this private apartment developer working on an off-campus housing contract, where the developer is saying UGA cannot move its classes to fully online during the pandemic, because they have an agreement about the number of off-campus beds to fill with students over the fall.

[Ed. note: This really has to be seen to be believed. Read up on it here.]

Which sounds, you know, like a private prison! Can’t have fewer prisoners because you’ve agreed to fill this number of beds. It’s the exact same logic, and that was driving the university’s policy about whether to bring students back to campus in the fall. During a pandemic.

Holy shit, man.

I mean, I have another example. If you want to hear it.

God, yes. All of them. Now I feel like I can’t look away.

I feel like this helps me actually understand what's going on. Because sometimes it's hard to see: Who benefits when you're talking about the federal government giving out student loans? Where's the financial interest? And I start to see it when I look at these stories. 

So, before this, I was at the University of Tennessee, in Knoxville. While I was there, they demolished and rebuilt the Student Union. It's a block-long building, and it was supposed to be $150 million to build, it ended up costing over $200 million. It's one more big, shiny, airy looking building, very little of which is accessible to the students—they ended up putting most of the admin in it. You know, they have a Shake Shack now, they have a couple of new fast-food, sad restaurants. It's terrible eating options, like really upsetting, like you cannot eat well there.

But I read in the New York Times that this building was financed by a large “gift” from the food contractor, Aramark. They gave a multimillion dollar “gift” to finance the building, but it turns out that came with the promise of getting repaid through students’ meal plans! So the university was charging $300 per student per semester for some extended period of time. And UT changed its policy, so that even if you were a commuter, you still had to pay $300 a semester for this fast food. Our students could not afford this. And it's not even good for them! Like, they don't want it, they can't pay for it, and it was all paying for this big shiny building. We see these big fancy buildings, but we don't see whose backs the whole thing is actually falling on.

It seems like, once you accept that $1.7 trillion dollars of student debt is something that drags on the economy overall, it should be the case that everyone is offended together, like a big bipartisan wave of disgust, at the grotesqueness of what all that debt is actually paying for. Like, I don’t want to necessarily drive down our sense of the value of higher education, but it’s obvious that student debt is funding so much crap that is not education. Beyond the fact that we are a moron country, why aren’t we all together on this?

[a sigh]

I think the big hurdle to get people over is to even gain an understanding of what debt is and does in the first place. Because, like you were talking about, the value of education—I've been talking with students, including my own, about student debt cancellation, especially lately, and it's interesting. A few of them—most of them are all for it, obviously, and you would expect them to be—but interestingly, there are a few who express concerns, whether they admit the concerns are their own or not, or they say it's from their friends, but they say, “I hear that my college degree might be devalued if it was free.”

Wait, what? I cannot wrap my head around that at all.

I know, I couldn't, either! Because I would have thought, you know, you do the work, you get the degree, the degree shows what you accomplished. It's not, like, that you are in debt for the rest of your life that proves that you worked hard! But it's wormed its way into our heads that the only way in which you earn something is that you suffer for it, in this case by taking on debt.

And that is very effective. This is why they loaded all of us up with that idea, because it leads you to control yourself, your behavior. Whether or not you even have a lot of debt. Think about your credit score: If you have a bad credit score, you're not necessarily living a debt-filled lifestyle, but you might start changing what you do in order to improve your credit score. In order to be able to take on more debt. I'm trying to eventually buy a house, so I'm going to stop doing this or that, I'm going to stop eating out and do, you know, whatever. The more I read about this, the more I realized that that must've been intentional, that they knew that they could get people to change behavior and live in a more narrow range of life choices. And, for example, pursue a more narrow range of majors! Just looking at a graph of major choices, back in the 1970s you had more (for example) sociology majors. And now, yes, we have criminology majors, but everybody else has gone to business or policy or health fields, because they’re told you have to do the smart thing. And you’re told that sociology majors aren’t a smart thing, because maybe you will start asking questions about, uhh, your university and how everybody is making money off of you.

Yeah, when I was in high school decades ago and I told adults that I was interested in sociology, the common line was, like, “Oh, are you gonna get a job at the sociology factory?” It’s depressing to think of the pressures of needing to redeem a choice that comes with thousands of dollars of debt.

Yeah, we act as if it all makes sense. And we've made college carry the burden of more and more of the fact that our labor system doesn't actually make sense. Tressie McMillan Cottom is an amazing sociologist who has done a lot of work on higher education, she wrote about for-profit colleges and did an ethnography of them. She's one of the only sociologists to ever make it on The Daily Show. 

She really understood where we were going, like, not just with higher education, but with our economy as a whole, by studying more openly predatory systems. She correctly predicted higher education in general would be following in these footsteps. She says that higher education, the reason why this isn't working is because we have a shitty labor market. And higher education becomes both, like, the fall guy and a kind of castle on the hill for so many people. 

We’ve made it, like, “Oh, we don't have to increase your wages, ever; we don't have to let you unionize; we don't have to make more jobs, or any of that. We can just tell you to go to college. Oh, and if it didn't work out for you, you did it wrong. And, you should’ve also managed to not pay for it. You should’ve taken a different major, you need a different degree, you need an additional degree.” And then you do that, and then you’re a sucker. And Cottom talks about how credentialization is really key to all of this, but she also talks about—and this is an older sociology term but she’s brought it back—the Education Gospel, and the idea that all education is good. And so therefore more is better, and there’s no dollar value that is too much to spend on it.

And as an academic, we do kind of have this idea of initiation, You are essential, you get to be one of us. And that’s why her work makes me super uncomfortable! But I think she’s completely right! And she was 100 percent right when she said that we would start seeing these innovations from for-profit schools spread elsewhere. Because as soon as she said it I started seeing, like, Purdue, and [ahem] other state universities talking about how each department can generate more revenue to balance the budget. And how we’re going to make state schools into destination institutions in order to draw—in Iowa we have a demographic problem of declining numbers of young people, so we have to think of new ways to attract out-of-state students. And then they talk about something that I was initially writing about with Raphaël Charron-Chenier in our first paper on school debt, which is something we call “predatory inclusion.” It refers to the process of welcoming students of color into these institutions, but on terms that undermine the benefit.

Ah, yeah, like with the housing bubble, right? Where, like, Household Finance and the other creeps of predatory mortgage lending were “spreading homeownership to new communities” but on terms that were explicitly designed to exploit the borrowers and withhold the actual benefits.

Yes. It’s like, “Just kidding!” And then blaming the people who bought the houses! When in fact there were higher-level financial shenanigans happening that caused the problem, and the borrowers were just a convenient scapegoat. And watching that, and then realizing as we tracked debt over the recession that every other form of debt decreased except for student debt, and that for black households, it was going up much faster than for white households, we saw that lenders learned something from the Great Recession. And it was, “Let’s do this in another field.”

The dynamics of the recession and the rise of student debt are intrinsically connected, too, because for-profit schools especially are taking advantage of the fact that so many people of color specifically were pushed out of the labor market. Those really high unemployment rates that we saw during the recession were met with the “opportunity” to go to a for-profit school and try to get a new credential so that you were finally more marketable. And as Dr. McMillan Cottom points out, that had a lot of appeal for low-income people because you could start right away, you could get some school loan money and start to, like, to be able to eat again. 

People were being pushed out of the labor market and into the arms of for-profits. And the people behind this were right, in the sense that this was an under-tapped market that they were reaching out into, and now public institutions have seen that and are like, “We want a share of this market.”

The comparison to the housing market is alarming because compared to mortgage lending, here there isn’t even a physical asset! There’s just “education,” and the murky and fleeting value of a degree. And a lot of people don't even walk away with a degree! I am freaking out now that I think about this, about what it means for a huge chunk of the population to be taking on huge amounts of debt for something that has no, like, resale value. It’s only worth what it’s worth to you, and that might be nothing!

I mean, yes, it is different from debt that is attached to an asset, where you’re getting equity out of it and so forth. But I also think that we do not realize how much of our economy is based on debt, and is not actually real. Like, the Great Recession—that was the first time in my life that I’d ever heard of securitization. In fact, I actually learned about it from a sixth-grader I was teaching.

Whoa, that is one serious sixth-grader.

Yeah! She had been hiding that she was really smart! But finally she admitted it and started talking to me, and she was telling me that she was invested in the stock market. This was 2007 and the recession was just starting to happen, and one week the stock market was really bad and I came in and was like, “Hey, I bet you lost money!” And she was like, “Nope, I made money. I shorted stocks.”

I had to read three whole damn books to wrap my head around securitization, and I was like 27 years old.

She was already far into it! And I was like, “This is diabolical! This 12-year-old is profiting off the recession!” And I swear that conversation, like, set me on the course I’m on now. Just to understand how you could do that, and what it means when a society is letting people bet against the survival of other people. Where you as a bank could be indifferent to whether you make your money through the front door—through the mortgage payments—or through the back door of your securitization, your default swaps. And that is something that debt allows—it allows you to compound out at these different angles to people who bet for or against you. And you can profit from debt while having no direct tie to the debtor/debt-holder relationship.

I’ve stopped talking about this with my students because I don’t think it sounds credible but I looked up what amount of dollars is currently held in derivatives and moving through the economy via these bets and futures trading and everything, and at the time that I was trying to talk to my students about it the number was, like, $1.2 quadrillion dollars.

[several seconds pass where we are both just wheezing with laughter]

I don’t think a “smart,” “trustworthy” professor will say the word "quadrillion" very often.

And I was originally an English major! I got into this because it all sounds like science fiction and so fantastical, and yet we’re all supposed to take it seriously. Now I really just try to poke holes in that narrative. Like, we’re all supposed to accept that that is, uhh, normal and seems like a good way to run things? Because I don’t think it’s a good idea to have, say, water futures? Traders allowed to bet on there being a drought and then testing ways to make it happen? That doesn’t seem like such a great idea to me, and I guess I’m just gonna stick with that perhaps financially ignorant point-of-view.

I remember with the housing bubble, shit like the synthetic collateralized debt obligation made it extremely tricky to figure out who the hell was on what end of all the spiraling debt. In the case of school debt, who owns all the debt? Like, who is doing the collecting?

Well, as of 2011 or maybe 2012, President Obama changed things so that the federal government was directly issuing loans. So it depends on when you took out your loans, who has the debt. Because before that, the federal government was just guaranteeing your loan, and they were basically brokering a deal between you and a private lender. Which meant that the private lender didn't care much if students defaulted, because they would get 100-percent made whole by the government and then they would also get a percent of anything that the government could then extract from you over the rest of your life. So they get paid more in the event of a default.

Real good system.

Brilliant system! Then the federal government in 2011 or 2012 switched to becoming the lender themselves so that they hold the debt. Incidentally, this also prevented private lenders from being able to securitize student loans, which had been an active market. They're called SLABS, Student Loan Asset-Backed Securities—those are still circulating, but they just couldn't make new ones.

Right now the federal government is giving out the loans. But in this ecosystem, you could extend out to loan servicers who make a fee from, like, sending you your bill every month, and then supposedly certifying you for income-derived repayment, and so forth. And that's, you know, that's not a small amount of money that they make every year. I also am interested in how they’ve cornered the market on student loan financial literacy. Like, online, if you google any question—you might’ve run into this, but when I’m trying to do research, I have run into it—you're trying to do research and look up any basic question about student loans, they have clogged up the whole internet with junk information. And if you look at who runs all these websites, it's loan servicers!

They steer you very effectively into what they want you to see and the available narratives that there are about, like, how do we pay our student debt? Just take on your fourth job and move home. Or, Just be wealthy! Then there are the ads that they're getting from those websites, which are about refinancing your loans, so they're designed to steer borrowers into the private loan market.

I saw a really harrowing stat from your paper about how 90-plus percent of white borrowers will have paid off their school loans within 20 years—

That’s a tricky statistic, the way it’s worded. To get it completely right: The median white borrower, 20 years after they started school, will have paid off 94 percent of their debt. And the median black borrower, 20 years after they started school, will still owe 95 percent of what they borrowed.

I had that all mixed up, but the correct stat is just as devastating.

It is. A lot of the data that we have, we use the Survey of Consumer Finances to track this,  because it's the most up to date. But a lot of what people are using is kind of retrospective. So they'll say the cohort of people who started school in 2003, or the cohort in 2012. That means we do not know very much about the cohort of people who started school in 2018. The debt levels are going like this [uses hand to indicate a huge spike]. And anything that we're seeing, it’s like we're watching a star explode, but from 20 lightyears away, and we're like, “Oh, hmm, that looks bad.” But it has not reached us yet.

Clearly that’s a terrible metaphor. I’m not, like, an astronomer.

It's fine! Outer space metaphors are right in my wheelhouse.

You get the idea. We're looking into the past to see the impact on people then. 

The thing it makes me think about is people who object to school debt cancellation because they personally paid off all or most of their own school debt. But, like, it’s clear from the current spike in total school debt and the number of borrowers that previous generations having paid off their school debt is not producing a lasting benefit, in the form of parents being able to shield their kids from taking on mountains of their own debt. Like, this debt is standing in the way of people being able to do better things with the money they make.

Yes. When people say they've paid their debt, and they're fine, I think there's a number of things to say, whether it's that their college probably cost a lot less, that they probably proportionally were making more money (since the minimum wage has basically not moved), and that also, with college having to carry all of the weight of our shitty labor market, a college degree no longer translates into the same economic opportunity. It still makes you more money than if you didn’t go to college, you still have an increase over the course of your life, in terms of expected salary. But some of my best students at the University of Tennessee graduated and went into jobs making $10 an hour. They had to stay in town. On the whole they do not have the same jobs that people who are writing about this on Twitter had when they graduated college, and the people who did better as undergraduates now are going straight into graduate school. I don’t see it translating into the same immediate ability to start paying back your loans.

The other piece of this—and this is why I studied the racial wealth gap in relation to this—is white families have a much different ability to pay off debt. Not just because their credentials translate into a higher return on education, and not just because they’re more likely to be able to graduate, and all the other things that compound together, but because they’re more likely to receive an inheritance that allows them to pay off their loan, more likely to get a down payment handed to them by their family, so that they have more disposable income available, or to buy a house so that they have more money to throw at their student loan, because they’re not paying higher rent. There’s so many different specific effects of the racial wealth gap—which is still right around 10 white dollars for every single black dollar of wealth—that to some degree, people saying I paid off my debt and you can, too might really be saying, like, I have white wealth.

Whether or not they see it as such—they may not feel wealthy—the fact that their parents own their home securely and didn’t have to take out a second mortgage on it and go into foreclosure is very much a racialized part of American life.

Yeah, and racialized employment disparities would bear on a person’s ability to pay back school loans, too, right? Like, Mr. Bootstrappy Loan-Repayer is not accounting for inequities in pay and advancement opportunities and so forth that generally work to the benefit of white people in America.

Right. And, too, as a black or Latinx young person, you're much, much more likely to be giving money to your parents in your 20s and 30s than if you are white, in which case you are much more likely to be receiving money from your parents. Whether that's car or health insurance, your phone, or whatever. This is something that Oliver and Shapiro wrote about in Black Wealth/White Wealth, and when I was working with Tom Shapiro on some of this debt cancellation stuff. His new book, Toxic Inequality, has a chapter about inheritances, and white people don't even see what they've received as inheritances because they just think this is what it means to be an adult. They don't realize that not everybody gets these thousands of dollars handed to them, in one form or another. 

Researchers at UIC’s Institute for Research on Race and Public Policy have a report coming out on the racial wealth gap in Chicago, tracking people who graduated from college—so middle class, black, white, and Latinx parents. And they had this exact same thing happen where, yes, they all went to college, but the white families were making a dent in their student loans, they had savings accounts for their kids’ college, they were buying houses. And this was just not true for the black and Latinx families at all, they were still paying off student loans that were heavy for them, and then they were looking ahead and being like, “Oh my god, I'm about to have to start taking on more loans for my kids.”

Is there a tipping point? Like, with the housing bubble, the moment housing prices plateaued, the whole mortgage market collapsed. Is there a corresponding tipping point in the school debt market, where people’s pensions and shit take a beating because the whole thing becomes untenable? 

There has been a debate over the last 10 years over whether this is the new bubble. Usually when people say it is not, it’s because, they say, it cannot burst. You don’t have to worry about that! 

Well, that’s terrifying.

It’s always helpful, I think, to see the similarities and the differences. I don’t think—the thing that would prevent that catastrophic loss from happening is what you mentioned earlier: that there’s no tangible asset to lose, or nothing to gain. And I think that shows the intangibility of student debt, and in fact why it would be so easy to just cancel it! Like, not because education wasn’t worth anything, but the best rationale I can see is that it’s like a retroactive public funding of higher education that recognizes, OK, yeah, the government should’ve just taken the tab for this one. It benefits us all to have more people go to college and, like, understand things?

I like the example of the coronavirus. Like, it would be good to have more people who can think about concepts like exponential growth and public health, beyond their own personal interest! And that’s a type of thing you’d learn at college, in those "useless" degrees! So you’d have this numeracy that’s not calculus but gets you to think beyond yourself. It’s a public benefit, for everybody, to have more people in those positions, and taking jobs as nurses and doctors and teachers. These aren’t useless things!

It does feel sort of icky to hunt around for practical justifications for, like, education and debt forgiveness, when there should be perfectly sufficient moral and humanistic reasons to want people to have access to lots of knowledge and also be released from crushing debt that could alter their family’s trajectory for whole generations. But I guess that’s another thing that has infected our brains, along with bizarre pro-debt ideas, is a sort of knee-jerk instinct to frame everything in the context of its utilitarian value.

Yeah. But I actually don’t think that’s how we’re gonna win this. I think there will be some people who are brought on board if we couch it as a huge stimulus to the economy, which it will be! But I think if you hang your whole argument on that, that's when people start producing papers saying, “Oh, it will only produce a two-cents-on-the-dollar stimulus to the economy.” They're then able to use funny math to weigh that against the supposed cost to the government, when there isn't a real cost to the government, this is debt cancellation, which is really different. 

And the government has been making a net profit, as calculated by Fair Credit Reporting Act accounting. In the last few years, the government is making money off of interest in fees from students. But many of the people who are accustomed to setting the narratives and the available options, and who are saying, “This isn't a bubble, we're fine,” they are used to being able to make calculations their own way, with a very limited amount of information. And a lot of people wind up playing according to their rules.

So, for example, at the same time that the government started giving out their own loans, they started using what they called Fair Value Accounting Standards. They calibrate the loans to the interest a private lender would charge them for those student loans. Not the cost to the government, which is very low, because they're borrowing the money for practically nothing.

So they’re pegged to a system that is fundamentally predatory? GREAT.

Yep. They’re like, “Well, we could’ve been screwing you more, but we didn’t. So that’s our loss.”

That is the same world of people who talk about the cost to the government, or, like, “Can we afford this trillion-dollars of student debt cancellation that we’re talking about?” And the more time I spend trying to wrap my head around this, the more I realize that our fundamental terms and ways of defining and understanding depend on these misconceptions about how it even works, or where the net gain or loss is. We don’t have good data for, say, how much an individual student is paying per month, we don’t know how much someone might pay over the course of their loan’s lifetime or to pay off a certain amount of debt they started with. You do see anecdotes from people, I started with $20,000 in debt, I’ve been paying for 20 years, I now owe $21,000 in debt. 

Oof.

You’ve heard these stories! When it comes back to the transformative thing, there is something beyond, like, “Oh, this person with this extra $20,000 can now do X or Y.” Like, yeah, they can buy a house, yes, they might start a family—the data does show that, from a natural experiment, when people had debt canceled from a for-profit that was fraudulent, they were more likely to take on a new job where they made more money, because they could, and they were more likely to move. In five years, their lives were transformed. So that's great! But the way people talk about it when they talk about how their life would be different, it is not, like, I would have 5,000 more dollars. It's I could live, I would have so many more avenues open to me, this would be such a weight lifted off of me. And that is where I was talking about how the debt keeps you on a narrow track. Predictably. And the credit card companies need you to behave predictably!

It seems like the gig economy, too, sort of capitalizes on the stress of people who specifically do not feel that the world is this inviting place full of possibilities, but is instead just a constant fucking hustle. Like, the hostility of the job market and the crushing school-debt equation combine to force people onto these narrow tracks, and then the “disruptors,” in addition to creating the circumstances of the job market, are positioned like crocodiles in the river, waiting for the moment when you are forced to enter.

Yes, and this dynamic is not new! I mean, like you said, that there's so much debt based on something that's not real may be new, but historically the dynamic that's describing is not. Sharecropping similarly was about recreating a system of labor control and social control through economic control, where you didn't have to have the whole huge legal apparatus of slavery and the political system that that entailed, you could just have a relationship between a sharecropper and the landowner. They didn't have to say, You can't leave, but they could say, You have not repaid your debt yet, wait till next year. And that effectively locked people in.

I think that's where debt cancellation becomes real dangerous, because it shows that this is pretend! Like, how much else is pretend, if the debt isn't real? That's where they freak out about moral hazard, but it's not really about the debt, it's like, what if people realize what we’re telling them isn't true, about their lives? And that they could actually do what they want and deserve to be happy and be paid a decent wage no matter what work they do?

I’m thinking back now to what I said before about mortgage debt at least being real and attached to a tangible asset, and now I realize that I sounded like a big dumb idiot. For the same people for whom school debt is attached to a fiction of upward mobility, homeownership was maybe even more a malicious fiction. Like, the whole mortgage machine was using homeownership as bait to lure low-income borrowers into a financial trap where you never actually owned the home, and for that matter didn’t really even get to live in it very long.

Yes! And I was going to say that but then we talked about a bunch of other things. 

This is something else that was completely engineered: The federal government in the 1930s, one of the ways that they leveraged us out of the Great Depression, was to generate the white middle class, which was kind of a one-time thing that we now expect just happens on its own. But it happened through an immense amount of work and investment! The idea that your house is an appreciating asset was invented during that time, and, again, we’ve normalized it now, and we say, “Of course, your house naturally should be worth more year after year.”

And that assumes some vaguely upsetting things, the more you think about it.

A lot of things! This is why I think I need to understand all of debt in order to get one piece, is that debt, like, the condition of being in debt induces you to do harm to others. So the terms in which your house is an appreciating asset require that other houses in other neighborhoods are not appreciating in value, or are even losing value. That incentivizes you to hoard resources inside your neighborhood, to do things to increase the relative value of the school in your neighborhood, in competition with schools outside your neighborhood, to invest in a system where local property taxes fund schools, all the way down to how you treat your neighbors, how you might view them as potential threats to your prospects of pulling wealth from your home. Instead of that relationship being, like, I live here.

Even the idea that we are supposed to move every few years to a house that is grander, and we've never actually paid any of them off? You, like, somehow become more and more wealthy out of this process? I'm from Santa Cruz, which is near the Bay Area. It was already getting pretty expensive when I was a kid there. But since I've left—it's right near Silicon Valley—housing prices are just exploded, without the houses really changing? Everybody who has remained now believes that they, like, deserve to be a millionaire. They're sitting on this million-dollar asset, and it's changed how they treat everybody else and how they move through the world. But they're like, I am a millionaire.

But that’s really toxic! And there’s so many levels to which just believing … that ... shapes relationships and harms us as a whole.

It’s scary to think of the consequences of creating this more-or-less imaginary groove that a person must find their way into in order to get from here to wealth, and then making as one of the very first conditions that you assume a bunch of debt. Like, the groove itself is bogus and leads nowhere, but the debt is extremely fucking real!

Right, you go to college, which means taking on loans, and you buy a house, which means taking on a mortgage. And the thing that I’ve realized is that white wealth is the only thing that makes white debt work that way. Whether it's that your house will appreciate and so the purchase of the home will pay off, or white wealth protects you from the potential negative consequences of taking on an unsecured loan, we're telling a story of, like, this worked out for white middle-class people. Because it was specifically designed to! And then you're like, “Well, why doesn't it work for you?” Because it was designed not to. 

I think that's just fundamentally where you get to when you're foregrounding racial inequality when you look at student debt. You get a really different story than if you’re trying to understand student debt as, like, but the middle class has it.