This piece was originally published at DylanRatigan.com.
Student loan debt is crippling our economy. We’ve seen an entire generation of students held down by crushing debt.
45 million borrowers are struggling with monthly payments, predatory and aggressive bill collectors and confusing repayment terms.
Nationally, student loan debt just behind mortgage debt in the United States. It accounts for a stunning 10 percent of debt balance – that’s a total of $1.48 trillion nationwide.
According to New York state statistics, the average student loan debt in our state is $30,000.
The system is broken, and we have to fix it. If a student is trying to pursue higher education to better themselves and their future, they shouldn’t be saddled with loans that take years, and sometimes decades, to repay.
Student loan debt doesn’t just hurt borrowers. It’s holding back our economy on a larger scale. Borrowers are often saddled with so much debt that they can’t even begin to think of purchasing their first home, secure an auto loan, or fully participate in the banking system. Many have to delay saving for retirement for years, just to try and find the cash to pay their student loans off.
I spoke with Natalia Abrams and Cody Hounanian of Student Debt Crisis,a non-profit group advocating for a better structure for student loans. I originally met Natalia at the founding of Get Money Out over a decade ago. Since then, she’s become a leading voice advocating for change in the student loan industry.
TRANSCRIPT (Unedited & Unchecked)
Dylan Ratigan: Welcome to the We Can Fix This Podcast, looking to highlight actual solutions and actual ideas to actual problems, so that we get out of the business of complaining and get into the business of understanding what’s already happening, to solve the things that we tend to complain about and frequently for good reason.
We’re joined today by Cody Hounanian and Natalia Abrams. Natalia and I met originally at the founding of Get Money Out just under a decade ago. She really pulled me aside at one point and just really emphasized to me how clearly and devastatingly real the student debt crisis is and utterly crippling, not only the individual lives in this country across all generations, not just young people, but also structurally crippling our economy, our ability to have mobility, and ultimately our basic sense of human dignity and respect.
Natalia, it’s been a while, and I know that you have been able to create a much more focused organization on this specific issue of the student debt crisis. In fact, your organization goes under the name “Student Debt Crisis.” Give us a sense of sort of what your intention is. What can be done right now going forward, and what are you doing and what resources? Give us a sense of what you’re doing and what you need to do more.
Natalia Abrams: We are working to reform the way we pay for education in America. We are working to support the 45 million borrowers out there in America. Right now, first and foremost, we need to remember that we can still be on the offensive. We do not need to be just defensive. We’re working on refinancing for private loans, simplifying repayment options, and having state consumer protection for student loan borrowers all over the country.
Dylan Ratigan: What specific actions are you taking and can others help you take to advance this agenda?
Cody Hounanian: Yeah, you know, one of my favorite campaigns that we’re running right now is our campaign to protect public service loan forgiveness. Why I love that is because it’s really amplifying the important work that people in our communities are doing to make our world a better place. It is so dark and difficult for many people right now, so uplifting and helping people with their financial wellness who are firefighters, nurses, teachers, that really means the world to us and our supporters.
Dylan Ratigan: What’s the current situation with the issue of advancing and not just defending, but advancing loan forgiveness for public employees?
Natalia Abrams: I will say we are seeing some wins. We saw last year that Senator Warren and many senators demanded expanding the public service loan forgiveness, and that’s a small fix for borrowers. And more importantly, in last year’s budget, they wanted to gut the program, and they weren’t able to with the recent tax bill and any recent bills. We were able to keep right now and protect public service loan forgiveness, and they’re finding fixes to help borrowers that were misled down the line.
Dylan Ratigan: If you had a magic wand, but you had to live in the reality of some aspect of the American political system and banking system, what solutions would you want?
Natalia Abrams: It would be a two-pronged solution. It would be debt-free college, so we don’t get into this $1.5 trillion problem again, and that means that no one graduates with a lifetime of debt. And we would have to do something about those loans. We should cap all interest at 30% and then make it retroactive. This could mean forgiveness for millions of loan borrowers with older loans, who have paid more than their fair share for years, often more than double the initial loan balance, and they still owe.
Dylan Ratigan: Have you thought about how you would reconcile that with the level of disruption that that loan forgiveness would create in the U.S. banking system, which has been partially built on expectations of that debt, along with housing debt and all the rest? And I’m not defending the banks. I’m just speaking from a pragmatic standpoint.
Natalia Abrams: Of course. We’ve recently seen studies that are showing the impact that student borrowers are having on the economy by not participating in it. They’re not purchasing homes. They’re not participating in the banking system and purchasing consumer goods or automobiles. We have seen recent reports that say, by forgiving all the student loans, we’re just talking about the older loans, but all the student loans would actually stimulate and benefit the overall economy.
Dylan Ratigan: Do you have a number or an order of magnitude?
Cody Hounanian: A recent study suggested that … I don’t have the actual number-
Dylan Ratigan: Well, let me ask the question a different way because I don’t want to put you on the spot for a piece of data that’s a distraction. What I’m getting at is is there any sense of … do you get more than a dollar of value out of the increased freedom and productivity than you lose in the dollar of debt forgiveness?
Cody Hounanian: Yes. GDP would absolutely go up under a plan that forgives both private and federal student loans. Then, on top of that, it actually would improve employment rates, so this is really a bottom-up type of relief system that focuses on helping individuals before we talk about helping banks. Of course, increased GDP and better employment is good for the entire economy, so starting there and making sure that people have sustainable employment in their life is crucial.
Natalia Abrams: We do have some numbers as well, and models show that canceling student debt would lead to a boost on an average of $86 billion and up to $108 billion annually over the next 10 years. And it could reduce unemployment rate about 0.3%.
Dylan Ratigan: So, Natalia, you and I met originally around the issue of money and politics. Explain to everybody, you’ve explained it to me plenty of times, what the relationship you see is between money and the political system, and really more largely a broken political system, whether it’s gerrymandered lesser-of-two-evils voting, all the things that we all know. But the relationship between that broken political system that has disconnected from our government and student debt.
Natalia Abrams: Absolutely. I often testify to Congress, both at the state and federal level, and every time I go, there’s a lobbyist for the student loan servicer companies. This is [inaudible 00:06:57], this is Navient, this is Great Lakes. These are the things that our government subcontracts, which our tax dollars are paying for, by the way, that are paying off our politicians to make sure we don’t have substantial changes in student loans.
Natalia Abrams: It absolutely is impacting it. From the school level to the loan level, we are seeing lobbyists on all fronts pay off our politicians so we can’t see real reform on basic things like refinancing your student loans or being able to go bankrupt on your student loan, which all other financial products allow you to do.
Dylan Ratigan: Yeah, so we all know the stranglehold on policy, whether it’s student debt or healthcare access or 1,000 other things, that the hammerlock or the stranglehold is in that relationship. That’s why I’m so encouraged to see the momentum we’re seeing around reform, whether it was the passage of rank voting to eliminate lesser-of-two-evils voting in Maine over the past few days or recent victories to push for redistricting, both in Ohio and Pennsylvania. There’s no question we’re in the process of solving this. It’s just every day is a day too long.
Dylan Ratigan: Student Debt Crisis is the organization. Natalia, if people want to help add momentum to join your efforts, how do they do it?
Natalia Abrams: So, they need to go to our website to sign up. We encourage people to take action, sign our petitions. Most importantly, send letters to your legislators and vote. Vote on June 26 in New York. Vote in your primaries. Vote in the general elections. That is the way we’re going to make change, not just for student loan borrowers, but for all Americans.
Dylan Ratigan: Natalia Abrams and Cody Hounanian, Student Debt Crisis, thanks a lot for giving us a little bit more to work with, guys. Thank you.
Natalia Abrams: Thank you, Dylan.
Cody Hounanian: Thank you.