DIY U

(crossposted from the Huffington Post)

Student loan debt has become a defining issue of the Occupy Wall Street movement. The nation’s cumulative student loan debt surpassed our cumulative credit card debt in 2010, and is heading north of $1 trillion; currently two-thirds of graduates take out loans, an average of $27,000 a head.

The growth of this particular kind of debt makes young people furious. It’s a betrayal of the American social contract that says if you work hard and invest in yourself through education, you’ll be able to build a better life. In my first book, Generation Debt, I explored how we got here and told stories about the emotional and cultural impacts of student loans; lately, with DIY U and the free Edupunks’ Guide, I’ve been focusing more on the underlying issue of soaring college tuition and innovations that might be able to cut the cost spiral–not to mention the growing world of free and open education.

These innovations are great, but they don’t help the graduates who are already saddled with so much debt. So here are some proposals to offer student borrowers relief that #OccupyWallSt could take up, ranked from the most radical to the more feasible.

1) Forgive all student loan debt. This idea has a Facebook page, a petition with 300,000 signatures, and it’s even been introduced in Congress. There are real fairness issues here because college graduates, even those with student loans are relatively more privileged with higher earning potential than non-college graduates. Still, if included as part of a radical call for bailing out the American people across the board — mortgages and credit card debt included– it has emotional resonance and could actually jumpstart the economy to boot.

1)a. You could help out those who most need it by canceling the student loan debt of non-graduates, defaulters, people who meet certain income requirements, or people who attended for-profits or other colleges with unacceptably low graduation rates (half of all student loan defaulters attend for-profits). See also: bankruptcy protection.

1)b. The radical direct action variation of this is for people to stage a debt revolt and simply stop paying their student loans. Advantage: Unlike with a mortgage or auto loan, they can’t repossess your brain. Disadvantage: You will never have credit again, and people in your life who have worked hard to pay off their own loans might see you as a deadbeat.

2)Rein in private student loans.
Private student loans, those offered by banks like Citibank and Wells Fargo, are growing three times faster than federal student loans. They are much more expensive, with higher fees and interest rates ranging up to 15%, varying by your creditworthiness.
Private student loans could be abolished outright, or they could be required to offer the same interest rates and repayment options as federal student loans, which would severely restrict their availability. If we don’t do something to tame the private student loan beast, it doesn’t much matter what happens with federal student loans–the volume of private loans is set to outpace the volume of public loans by 2025, according to Mark Kantrowitz of finaid.org.

3) Reinstate bankruptcy for student loans.
Student loans are unlike any other kind of debt in that they are almost impossible to discharge in bankruptcy, barring permanent disability. For federal loans, the government can garnish your wages, seize your tax refund, your federal disaster relief payments, and even your Social Security. Even private, unsubsidized student loans, the ones with 10 and 15% interest rates, have been nondischargeable in bankruptcy since 2005.

Alan Collinge of Student Loan Justice has been organizing on this issue for several years. Bankruptcy protection has failed three times in Congress; there are currently bills in the House (sponsored by Rep. Steve Cohen of TN) and Senate (sponsored by Sen. Durbin)
This is an issue of basic fairness. There’s no reason to treat student loan debt so differently from other types of debt, other than as a gift to the banks.

4) Expand Income-Based Repayment and Public Service Loan Forgiveness.
Depending on how much you make and how much you owe, you have the right to lower your monthly payments on FFELP and direct student loans through Income-Based Repayment. President Obama just announced that he’s accelerating access to the plan so that graduates can pay just 10% of their income, with all loans forgiven after 20 years. Meanwhile, people who work in the military, for the government, for nonprofits, police, firefighters, teachers, social workers, have the right to have loans completely forgiven after 10 years of repayments.
One issue with these programs is simply that they’re undersubscribed. Another is that you may end up paying more by stretching out the payments, and you’re harnessed to that payment for 20 years. But they’re a hell of a lot better than default, and in the absence of bankruptcy protection, they’re the least bad option for people currently facing unsupportable student loan debt.