There was a whiff of Gladiator this week as the U.S. Supreme Court's majority - let's not call them conservative; they're straight up reactionary - garroted affirmative action and student debt cancellation.
While these actions will disproportionately affect African-Americans, the real target may be Joe Biden in 2024. Striking down affirmative action is probably a wash, appealing to right-wing Republicans while instigating strong get-out-the-vote efforts in black communities. But overturning the administration's executive order on student debt forgiveness is likely to depress turnout among Millennials and GenZ, who consistently poll more liberal than older voters.
The problem with younger people, of course, is that they don't vote in large numbers. Turnout for Americans between 18 and 29 was 43.4 percent in 2016, nearly 30 points lower than Americans over 60, more than 70 percent of whom voted.
It doesn't take a poll to discover why young people are disaffected. Amy, 25, (not her real name) grew up in rural New York State and is one of those people who has a strong connection with animals. She keeps a horse at her parents' house and crowds two rabbits and two cats into the apartment she shares with her fiancé.
Beth Mallett grew up in rural, upstate New York and she was always crazy about animals. An expert horsewoman, she wanted to be a veterinarian, but after finishing college $38,000 in debt, she gave up on her ambition. She's working at a bank while she tries to pay off her loans, adding $150 to the minimum on her monthly loan payments to get out of debt faster. Even so, she and her fiancé, a 28-year-old assistant manager at a Jiffy Lube, couldn't qualify for a mortgage. The reason? Amy's student loan debt. And that's even with regularly paying down her debt during the "pause" that gave borrowers a break during Covid.
To Amy, the deck is stacked against her and the country is going downhill. Will she vote in 2024? "Probably not." She feels that the world around her is hopeless.
“The U.S. Supreme Court was right to end the illegal and immoral effort by the Biden Administration to transfer student debt to taxpayers,” Scott wrote on Twitter. “If you take out a loan, you pay it back.”
He called on colleges and universities to “act to lower tuition and improve the quality of their programs” and vowed that as president, he would take action to make education more affordable and to expand access to vocational training. While there is a broad consensus that tuition costs have risen too dramatically over the past decades, that rise has slowed, and more students than ever receive student aid.
What's most striking about Scott's tweet is the invocation of morality when it comes to paying one's debts, a Victorian shaming of the poor so firmly embedded in our Horatio Alger mythology that we rarely think to question it. One of the few who examined the notion was the anthropologist David Graeber. In a review of Graeber's massive tome Debt: The First 5,000 Years, David Bollier described the way Graeber got beneath the cultural assumptions invoked by Scott and others.
Debt: The First 5,000 Years, is a sweeping historical survey of the social meaning of debt – or more precisely, the relationship between debtors and creditors. While many people regard this as a straight-forward moral matter – “everyone needs to pay the debts they owe” – Graeber invokes dozens of instances throughout world history to show how this relationship is highly complicated -- and essentially political.
Debt is not really a freely entered into contract between equals. It is a time-delayed market exchange in which the debtor agrees to be subordinate to the creditor for the duration of the loan. Upon full repayment of the debt, the debtor suddenly becomes an equal to the creditor again.
The subordination of debtors is not only morally fraught, as evidenced by synonyms for the word debt such as “sin” and “guilt.” Debt is also (indeed, primarily) a political subordination. The creditor has the whip hand – and debtors are vulnerable to all sorts of contempt, abuse and punishment. In Roman times, a creditor could seize a debtor's wives and children as collateral, and make them personal slaves, if the debtor failed to repay a loan.
Debt thus becomes a fulcrum upon which the rich and powerful -- creditors -- can hold entire classes of people in servitude.
It's not just students who are in play here; this is about the social order. President Biden's strategy is clear: heal the country's divisions by easing the income inequality that has engendered fear, resentment and scapegoating. The Republicans are pushing back on that goal, apparently with little or no thought to the effect that inequality and its discontents has on individual lives, or the country.
There is no morality in this Supreme Court decision. It is gutter politics. And it is cruel.
Biden Hits Back
Whatever one may find to criticize about Joe Biden and his team, they are political pros. After the court's salvo on affirmative action, Biden held a press conference. His passionate statement decrying the court's ruling was a reminder that he was a lawyer before he entered politics, and a lawyer who made his bones as a public defender.
“Civil rights, the Vietnam War, and President Nixon’s rampant abuse of power were the reasons I entered public life to begin with,” Biden said on the campaign trail in 2020. “That’s why I had chosen at that time to leave a prestigious law firm that I had been hired by and become a public defender — because those people who needed the most help couldn’t afford to be defended in those days.”
“He would take the case for black folks, for poor whites,” Richard “Mouse” Smith, a longtime NAACP activist in Delaware who has been friends with Biden since the 1960s, said in an interview. “He was a hero to the black community when it came to the public defender,” reported Buzzfeed. (While Kamala Harris took a shot at Biden's one-time stance on school busing, his actual position on that issue was far more complex than the campaign sound bite heard round the civitas.)
On Thursday Biden stressed - twice - that affirmative action did not give preference to unqualified students because of their race or background; it merely allowed schools to consider race when evaluating students who had met the criteria for admission. He pledged to find another way to address inequality.
"We cannot let this decision be the last word," he said on Thursday, describing a remedy that would allow colleges and universities to use adversity as a new standard for admitting students.
Watching the speech, it's hard not to think of Kennedys. In the 1960s and 1970s, Biden's words would have inspired a generation. In a society and media landscape that's badly fragmented, the words were all but lost.
On Friday, Biden took to the podium again, criticizing the Supreme Court decision on his student loan forgiveness program. Critics have noted that at $400 billion, Biden's student loan relief would have been one of the most expensive executive actions in U.S. history. Biden fired back that the Covid era Paycheck Protection Program cost $760 billion and, Biden pointed out, 7 members of Congress received more than $1 million, all of which was forgiven.
The administration is formulating new rules to ease the burden on many borrowers, but so far, they are not as sweeping as the executive action struck down by the court's majority: $10,000 to $20,000 for Americans earning less than $125,000.
Student Debt Economic Impact
Economists compare the rise in student loan debt to “the housing bubble that precipitated the 2007-2009 recession” and the subsequent economic downturn.
- Since 2006, the total national student loan debt balance has increased 116.76% or at an annual rate of 7.78%.
- In the 21st Century alone, the federal student loan debt balance has increased by 399.85%.
- The annual growth rate is 18.18% before adjusting for inflation; the adjusted annual growth rate is 8.35%.
- When expressed as a percentage of the global gross domestic product, the 5-year average national GDP has declined 40% since the 1960s.
- A college degree offers just under a 14% return on investment (ROI) on average.
- The average student loan debt has an 8% annual growth rate (2007-2021).
- 94% of Democratic voters and 85% of Republican voters support federal student debt relief in the form of refinancing federal loans to current rates (at an historic low).
- 52.8% of student loan debt holders could benefit from refinancing, reducing their average interest rate 27.6% (from 5.8% to 4.2%).
Student Debt Reduces Spending
Consumer spending is directly linked to personal finance. Economists agree that when consumers have less expendable income due to debt obligations, they decrease spending.
- Each time a consumer’s student debt-to-income ratio increases 1%, their consumption declines by as much as 3.7%.
- 18% of student loan holders find it difficult to buy daily necessities because of their student loans.
- Student debt is the 2nd largest type of household credit (after mortgages).
- Debt may inhibit spending for decades as 20 years after entering school, half of student borrowers still owe $20,000 each on outstanding loan balances.
- The total student loan debt balance exceeds the value of some of the national economy’s best-performing sectors; the pet industry alone is worth $77 billion or 4.7% the value of all student loan debt.
Debt Inhibits Business Growth
Small businesses are especially vulnerable to the economic impact of student loan debt as they are the most likely to rely on personal financing.
- Would-be entrepreneurs are 11% less likely to start a new business if they owe more than $30,000 in student loan debt.
- The average student loan debt per borrower is $37,750.
- Businesses with fewer than 20 employees create a net of approximately 466,600 new jobs annually.
- 99.9% of businesses in the U.S. have fewer than 20 employees.
- Small businesses with fewer than 500 employees employ 46.4% of the national private workforce.
- A joint study by Pennsylvania State University and Federal Reserve Banks finds “a significant and economically meaningful negative correlation between changes in student debt and net new businesses employing one to four employees…”
Debt Hampers Housing Markets
Consumers with student loan debt have lower credit scores on average and are more likely to live with their parents.
- 22 percent of individuals with student loan debt believe that their debt has influenced their ability to start a small business.
- 24.7% of millennial renters indicate they will never be able to afford to buy a home.
- In 2019, 14.9% said they would never be able to buy a home.
- In two years, the rate of millennial renters giving up on homeownership increased 65.7%.
- The national homeownership rate hit its peak in 2004 at 69.2%.
- Homeownership declined 1.1% in the 2010s; its low was 62.9% in 2016.
- The rate of homeownership has increased 3.1% since 1964.
Debt Stresses Social Programs
As more Americans take on greater amounts of student loan debt, they rely on social programs to make ends meet.
- 1 out of every 7 recipients of food stamps (SNAP) holds a college degree.
- Degree holders are half as likely as non-degree holders to use SNAP.
- 24% of Medicaid users hold a postsecondary degree.
- Adults without degrees are 2.5 times more likely than those with degrees to use Medicaid.
- Postsecondary degree holders are 64% as likely to be unemployed as adults without degrees.