Today marks what activists are calling 1T Day, the day U.S. student debt reaches $1 trillion. A coalition of groups from Occupy Wall Street plan to gather on college campuses and communities around the country to protest record-high college costs and call for an extension of low-interest rates on federally subsidized Stafford loans. In a bid to court the youth vote, President Obama weighed in on student debt on Tuesday with a speech at the University of North Carolina at Chapel Hill. "The vast majority of the $1 trillion worth of student debt is actually held by Wall Street banks," says Pamela Brown, a Ph.D. student who helped launch the Occupy Student Debt Campaign "Pledge of Refusal." "Those banks actually securitize these loans, and they sell them off, and they make enormous profits from them," Brown says. We also speak with David Harvey, a professor and author whose most recent book is "Rebel Cities: From the Right to the City to the Urban Revolution." "There’s been this immense attempt by corporations and the wealthy and so on to pass the costs of education on to the people who are being educated," says Harvey. "They don’t want to pay for training their own labor force. They want their labor force to train itself, and then they’ll use it." [includes rush transcript]
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NERMEEN SHAIKH: Today marks what activists are calling 1T Day, the day U.S. student debt reaches $1 trillion. A coalition of groups from Occupy Wall Street plan to gather on college campuses and communities around the country to protest record-high college costs and call for an extension of low-interest rates on federally subsidized Stafford loans. The rates were reduced to 3.4 percent in 2007 but will double on July 1st for new loans unless Congress intervenes. According to the coalition, 2010 graduates had on average over $25,000 in student debts.
As Republican presidential hopeful Mitt Romney moves closer to becoming the official Republican nominee who will challenge Democratic President Barack Obama in November’s general election, both candidates are concentrating on wooing the youth vote—pointing especially to the issue of student debt. Speaking to students at the University of North Carolina at Chapel Hill, Obama said every American family should be able to afford higher education.
PRESIDENT BARACK OBAMA: We can’t price the middle class out of a college education, not at a time when most new jobs in America will require more than a high school diploma. Whether it’s at a four-year college or a two-year program, we can’t make higher education a luxury. It’s an economic imperative. Every American family should be able to afford it.
AMY GOODMAN: President Obama will also speak at the University of Colorado in Boulder and the University of Iowa in Iowa City. Romney’s victories in five primary states Tuesday earned him numerous delegates and allows him to focus on the general election campaign against Obama. He has backed Obama’s proposal to extend low rates on government-subsidized student loans through next year.
To talk more about the issue of student debt, we’re joined by Pamela Brown. She’s a sociology Ph.D. student at the New School who helped launch the Occupy Student Debt Campaign "Pledge of Refusal."
Pam, welcome to Democracy Now! What’s the Pledge of Refusal?
PAMELA BROWN: Hi. Thanks for having me, Amy. Thank you.
The Pledge of Refusal asks that a million people come together to unite and refuse student debt. And the reason that we need to do that is we need to end our complicity with Wall Street at this point in terms of the $1 trillion crisis that we’re dealing with. It’s really just become an issue that we need to take action on, take direct action. And this is a nonviolent direct action form of civil disobedience. It’s a form of noncooperation with Wall Street.
NERMEEN SHAIKH: Can you explain that, though, Pamela Brown, because I think most people are under the impression that these loans are with the government, the debts are with the government, but you say Wall Street is involved?
PAMELA BROWN: That’s absolutely correct, and that’s a big problem that we have in terms of having people understand the true situation. The government only recently began to take on the majority of direct lending. So that’s only in recent years. The vast majority of the $1 trillion worth of student debt is actually held by Wall Street banks. And those banks actually securitize these loans, and they sell them off, and they make enormous profits from them. Furthermore, even the loans that are held by the government are ultimately securitized. Companies are paid. They’re compensated for servicing these loans. Because so many people are actually unable to pay them, we have a crisis where we have about five million people who are actually in default. And then there are companies that make enormous profits off of collecting on these loans. And these are Wall Street companies.
NERMEEN SHAIKH: Can you say a little about the action that’s planned today? What exactly are you planning to do?
PAMELA BROWN: Right. Today is a national day of action, and we’re commemorating this horrible milestone, which is a trillion dollars of student debt. There are actions planned throughout the country. Here in New York, we’re going to meet in Union Square at 4:00 p.m. We’re going to have Reverend Billy, who’s going to give us a debt jubilee, where we’re going to free ourselves of this enormous burden. Nationally—
AMY GOODMAN: Nationally?
PAMELA BROWN: Sorry nationally, there are actions planned throughout the United States at various colleges, as well as at all of the Sallie Mae regional offices, as well as the D.C. headquarters.
AMY GOODMAN: At the same address in North Carolina Obama gave, President Obama explained the implications of doubling interest rates on student debt.
PRESIDENT BARACK OBAMA: Five years ago, Congress cut the rate on federal student loans in half. That was a good thing to do. But on July 1st—that’s a little over two months from now—that rate cut expires. And if Congress does nothing, the interest rates on those loans will double overnight. So, I’m assuming a lot of people here have federal student loans. The interest rates will double unless Congress acts by July 1st. And just to give you some sense of perspective, for each year that Congress doesn’t act, the average student with these loans will rack up an additional thousand dollars in debt. An extra thousand dollars. That’s basically a tax hike for more than seven million students across America, more than 160,000 students here in North Carolina alone.
AMY GOODMAN: President Obama speaking in North Carolina yesterday. Pam Brown, the position of the Republicans and the Democrats?
PAMELA BROWN: Well, it’s good to know that they are—at this point, that both Mitt Romney and President Obama are in favor of keeping this reduction of the interest rate, but we have to also understand that this particular rate that we’re talking about only applies to newly originated federal loans that are taken out recently. It does nothing to solve the massive $1 trillion problem whatsoever.
NERMEEN SHAIKH: And what about the various reform proposals that Congress is looking at now, from bankruptcy to debt forgiveness? Can you talk about those?
PAMELA BROWN: Sure. Well, to start with the bankruptcy proposal, I mean, these proposals have been—over many years, there have been many different proposals. I think there’s been at least four different bills in Congress just trying to restore bankruptcy protection, even in some cases just—in the case of being in a horrible accident, where you’re no longer able to work. These are very small requests, and they’ve all—none of them have ever passed. So that’s problematic. In terms of the forgiveness bill, it could be a great measure. Of course, anything that can alleviate the suffering of recent generations, who really find this debt unpayable, could be useful, but it’s very unlikely that it’s actually going to pass. And once again, it only deals with a small amount of the problem.
AMY GOODMAN: Let’s bring in David Harvey, distinguished professor of anthropology at the Graduate Center of City University of New York. You have a new book called Rebel Cities: From the Right to the City to the Urban Revolution. Your comment on this day, what is being called 1T Day, the day student debt has reached a trillion dollars in the United States?
DAVID HARVEY: I think one thing is an immense contradiction. On the one hand, we’re being told we should accept a great deal of austerity, because we don’t want to saddle future generations with this enormous federal debt, at the same time as we’re actually saddling a whole generation of students with immense personal debt. So, go figure. I mean, it doesn’t make—doesn’t make any sense.
The other thing I would say is, I went through a tuition-free system. I was educated with no—and my own university, CUNY, was tuition-free up until the 1970s. And then a huge campaign was waged by the Business Roundtable, the Rockefeller Brothers and everything else, to impose tuition on CUNY. And ever since then, there’s been this immense attempt by corporations and the wealthy and so on to pass the costs of education on to the people who are being educated. Now, this is what—something that the economists call "externalities." That is, it’s—they don’t want to pay for training their own labor force. They want their labor force to train itself, and then they’ll use it. But the result of that is, we have this enormous defect in American higher education. I mean, this is one of the least educated countries now out of all of the OECD countries. The achievement in math and science are way, way down compared to everywhere else. And, you know, this is a disaster from the standpoint of the national interest.
AMY GOODMAN: Let me ask—I was watching some right-wing pundits on television yesterday who were saying this is a—interestingly enough, they were saying, a bailout of these universities whose costs have gone out of control. That’s what the government subsidies are all about, the loans are all about, subsidizing these universities. They should just bring down their costs.
DAVID HARVEY: Well, it’s true, in a sense, that the costs of higher education have been escalated in this—I mean, way, way beyond the rate of inflation, tuition rates have been going up. But even in the City University of New York, which is—we haven’t imposed higher tuitions, because austerity comes from Albany and says we have less money from the state. And so, you know, again, it’s putting the costs of education onto the people who are being educated. And they’re long-term costs, as you mentioned, a trillion dollars now. And you kind of go, this is unacceptable. This is debt peonage for a large chunk of the population.
NERMEEN SHAIKH: Pamela Brown, can you talk a little bit about how this debt is divided among the student population, the racial dimensions of debt distribution?
PAMELA BROWN: Right. Numbers are somewhat like—I believe it’s one in four Caucasian students have under $13,000 worth of debt, whereas one in three African-American students have over $38,000 worth of student debt. So, student debt is really a critical juncture in the production of inequality that we’re dealing with in society right now, and it’s something that Occupy Wall Street has been raising awareness about.
AMY GOODMAN: We’re going to interrupt the broadcast, because right now we have just gotten a call from Mumia Abu-Jamal from prison in Pennsylvania.