President Obama has unveiled new executive actions to address what some have called the nation’s next financial crisis: the over $1.2 trillion in student loans. Obama’s order will expand the "Pay As You Earn" program capping loan payments at 10 percent of monthly income. The program also forgives any outstanding debt after 20 years of payments. The massive cost of U.S. college tuition has saddled millions with crushing debt and priced many others out of the classroom. Student loans now exceed all other forms of consumer debt except for home mortgages. This year’s graduate class is the most indebted in U.S. history, with borrowers owing an average $33,000. More than 70 percent of this year’s class has taken on a student loan, up from less than half of graduates 20 years ago. We are joined by two guests: Pamela Brown, a Ph.D. student in sociology at the New School and leading activist on the issue of student debt, and Andrew Rossi, director and producer of a new documentary on U.S. higher education, "Ivory Tower."
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AARON MATÉ: President Obama has unveiled new executive actions to address what some have called the nation’s next financial crisis: the over $1.2 trillion in student loans. The massive cost of U.S. college tuition has saddled millions with crushing debt and priced many others out of the classroom. Obama’s order will expend the "Pay As You Earn" program capping loan payments at 10 percent of monthly income. The program also forgives any outstanding debt after 20 years of payments. Obama spoke at the White House on Monday.
PRESIDENT BARACK OBAMA: Today, I’m going to take three reactions to help more young people pay off their student loan debt. Number one, I’m directing our secretary of education, Arne Duncan, to give more Americans who are already making their loan payments a chance to cap those payments at 10 percent of their income. We call it "Pay As You Earn." We know it works because we’ve already offered it to millions of young people. The second action is to renegotiate contracts with private companies like Sallie Mae that service our student loans. And we’re going to make it clear that these companies are in the business of helping students, not just collecting payments. And they owe young people the customer service and support and financial flexibility that they deserve. That’s number two. Number three, we’re doing more to help every borrower know all the options that are out there, so that they can pick the one that’s right for them.
AARON MATÉ: President Obama went on to endorse a measure from Democratic Senator Elizabeth Warren that would let millions of students refinance their loans at lower interest rates. To pay for it, Warren’s measure would enact the Buffett Rule, closing a tax loophole for millionaires.
The figures on student debt are staggering. The nation’s $1.2 trillion in student loans exceeds all other forms of consumer debt, except for home mortgages. This year’s graduate class is the most indebted in U.S. history, with borrowers owing an average $33,000 upon graduation. More than 70 percent of this year’s class has taken on a student loan, up from less than half of graduates 20 years ago.
AMY GOODMAN: The explosion in student debt has of course mirrored an unprecedented hike in tuition. The cost of a college degree has grown by over 1,120 percent in the 30 years, far surpassing price hikes for food, medical care, housing, gasoline and other basics. All this points to a crisis that threatens not just the economy, but the nation’s education system itself.
We’re joined by two guests. Andrew Rossi is with us, director and producer of a new documentary called Ivory Tower. It opens Friday in New York and Los Angeles. In a moment, we’re going to play some clips. And we’re joined by Pamela Brown, Ph.D. student in sociology at the New School here in New York, a leading activist on the issue of student debt. She helped launch the Occupy Student Debt Campaign pledge of refusal and produced The Debt Resistors’ Operations Manual.
Pam, let’s start with you. Your reaction to what President Obama announced? What is the significance? Is it binding?
PAMELA BROWN: Yeah, first, thanks for having me on the show again. And the Obama announcement is an important announcement. It’s a good thing that students will—that many more students, about five million more students, will at least have access to this particular program. But, of course, it’s really just putting a band-aid on a gaping wound at this point. The problem is so much more enormous than, you know, reducing people’s payment to 10 percent of household income and forgiving it—so-called forgiving it after 20 years. But, of course, you have to pay taxes on what’s forgiven anyway.
AMY GOODMAN: Wait, can you explain? You say, if you’re part of this program?
PAMELA BROWN: Right. Well, the program has specific rules. There are several programs available. There’s income-based repayment, as well, which has been the most common one, I think, at 15 percent cap on income and a 25-year forgiveness. So this program is in distinction to that. And you could not have borrowed prior to 2007, and you had to have borrowed after 2011 to qualify for the program. And what Obama—
AMY GOODMAN: You have to have borrowed after 2011, not just before 2007?
PAMELA BROWN: Well, right, exactly. That has been the program in the past. And the question is: Exactly how will it be expanded currently? I read several articles that said it was going to be expanded to people who had borrowed prior to 2007, but that’s actually not stated in President Obama’s announcement.
AARON MATÉ: Pam Brown, If you were setting the agenda for a student debt movement today, what would be the main planks?
PAMELA BROWN: I think that the first demand has to be to write off student debt. Now, how that happens is up for discussion. I think that it should all be written off, because there are so many things that are profoundly unfair about the student debt system right now. One thing, if you’re 18 years old, you shouldn’t be able to get into $100,000 worth of debt before you can even go to a bar and have a beer. I mean, that, just out of hand, is ridiculous, and it’s the hallmark of a predatory system.
AMY GOODMAN: Senator Elizabeth Warren’s Bank on Students Emergency Loan Refinancing Act would let student loan holders refinance at 3.68 percent. The measure would come before the Senate this week. On Monday, President Obama took a shot at the bill’s Republican opponents.
PRESIDENT BARACK OBAMA: It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive, while students are having trouble just getting started in their lives. So you’ve got a pretty straightforward bill here. And this week, Congress will vote on that bill. And I want Americans to pay attention to see where their lawmakers’ priorities lie here: lower tax bills for millionaires or lower student loan bills for the middle class? This should be a no-brainer.
AMY GOODMAN: Andrew Rossi, you’re the director and producer of Ivory Tower, a new film that’s opening this week. The Warren bill?
ANDREW ROSSI: The Warren bill, I think, is a really important piece of relief or legislation for student debt holders. The idea that those who hold student debt shouldn’t be afforded the same ability to refinance as those who hold auto loans and mortgages seems totally Dickensian and unfair. And Ivory Tower really looks at how the whole system itself, as Senator Warren says in the film, is actually rotten or stinks, I think is her direct quote.
As Pam says, the entire system is really broken. And we look in the film at historically how government has played a really important role in making higher education a public good, from the Morrill Act that created the land-grant universities to FDR’s GI Bill and Lyndon Johnson’s Higher Education Act of 1965. And I think we wish at this time that President Obama could similarly be able to overhaul the whole system with such dramatic legislation. But unfortunately, I think as the president said, legislatively there’s not that pathway to be able to do such a thing. So, I agree with Pam that it would be great to really rehaul the entire system, but I do applaud this executive action, because I think it will at least provide some relief.