Don’t Just Pay Off Student Debt. Make It Extinct.
Over the weekend billionaire Robert F. Smith pledged to pay off the student loan debt of Morehouse College’s 2019 graduating class. This is an incredibly generous gesture that rightfully deserves praise. But it does highlight the problematic normalization of crushing amounts of student loan debt, and our growing dependence on the billionaire class.
Morehouse President David A. Thomas described Smith’s move as “a liberation gift” and said, “When you have to service debt, the choices about what you can do in the world are constrained.” Thomas believes that Smith’s gift will help these students support their families, start businesses, and follow their dreams and passions.
But in 2020, there will be another graduating class from Morehouse with probably the same amount of debt. Do we expect Smith to pay their debt too? Will the new norm be that Morehouse employees need to annually find a billionaire or a pool of billionaires to cover this debt? Should the financial “liberation” of the future classes also depend on the benevolence of a philanthropic billionaire?
Today, 44 million Americans owe $1.5 trillion in student loan debt. Philanthropic gestures are great, but we need systemic and sustainable solutions for the student debt crisis. Ideally, solving this problem should be the role of government, and we would pay for this stability by taxing the rich. But a crippling lack of trust in our government due to anti-tax propaganda and systemic racism prevents America from allocating our government with this responsibility.
Elizabeth Warren Calls for Wiping Out Student-Loan Debt, Making College Free
Presidential candidate Sen. Elizabeth Warren has released a very ambitious and comprehensive proposal for cancelling student loan debt and providing free college education. Sadly, her proposal has received less fanfare than Smith’s announcement—and she still polls behind other Democratic presidential candidates with less ambitious policies.
But this is not just about the cost of college. The broader issue is how we define and build a good and just society. After World War II, we agreed that ample taxation was necessary to support a strong public sector to build highways and community colleges and schools and to fund all manner of research. That progressive social compact (which sadly still included overt racism) came under assault in the 1980s, and we’ve been dis-investing in the American people ever since.
And inevitably, all this is highly racialized. Since the beginning of the republic, white Americans have trusted in the unequal distribution of government services for their own benefit. African Americans have always received disproportionately fewer social services than whites. Redlining ensured unequal housing segregation, and historically, the onus has always fallen on the black community to fund our own education. This inequality helped white Americans accumulate wealth and thrive in a society that had an average top tax rate of 70 percent from the 1930s to 1960s. White Americans supported high taxes—so long as they received the benefits.
However, the civil rights era of the 1960s changed the role of government in America, as it was now expected to equitably provide services to all Americans. Trust in our government has steadily declined ever since.
Republican politicians who opposed this social progress now developed other methods without overtly racist language for denying African Americans government services. Small government, the increased privatization of government services, and tax policies to benefit wealthy white Americans became the new norm.
This Republican agenda hit its peak under President Ronald Reagan, and “trickle-down economics,” tax reduction, and privatization have been their mantra ever since. These policies intentionally weakened the government’s capacity to positively impact underserved Americans and communities of color, and has dangerously shifted power to the billionaires.
When too much of a country’s wealth is concentrated in few hands it makes that society more prone to corruption and run by a class of oligarchs. None of us should be surprised that increased income inequality has resulted in the corrupt Trump administration that openly disregards our laws, weakens our democracy, and seeks allies with other authoritarian and oligarchic governments.
The increasingly diametrically opposed policies of the Democrats and Republicans, which has been on display since the Obama administration, has instilled distrust amongst the parties and our government as a whole. Currently, trust in the government is at an all-time low at 17 percent.
Additionally, when American billionaires, almost regardless of party affiliation, are asked if they favor increasing taxes on the rich, almost all of them refute the documented social benefit of taxing the rich. Potential presidential candidate Howard Schultz, the former CEO of Starbucks, dismissed Alexandria Ocasio-Cortez’s proposed policy to return the top marginal tax rate back to 70 percent as “punitive.”
Earlier this year, at the Davos World Economic Forum, CEO Michael Dell of Dell Technologies, also dismissed AOC’s tax proposal saying, “I feel much more comfortable with our ability as a private foundation to allocate those funds than I do giving them to the government.”
According to Forbes, Dell is the 25th richest man in the world with a net worth of $35.3 billion, Smith is the 355th with a net worth of $5 billion, and Schultz is at #617 with $3.5 billion.
All of this represents America’s sad Catch-22. We desperately need a government committed to equitably providing Americans with an education, and this includes addressing student loan debt and the growing cost of higher education. Yet we have very little trust in our government’s ability to implement these programs because we have never done it in a racially equitable way. Sadly, we have more faith in the alleged altruism of the rich because we have always depended on it for services despite knowing it will not solve our problems.
In the end, we ignore Warren’s policies and celebrate Smith’s philanthropy and get no closer to solving the problem. Hopefully, ensuring that all Americans get the “liberating gift” of an affordable education will be a major topic this year, and we can get closer to the equality America desperately needs.
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