Hello, I'm Jane Sanders, Founder of the Sanders Institute. We at the Sanders
Institute and our founding fellows believe that vital democracy requires an
informed electorate, civil discourse, and bold ideas. Our mission is to revitalize
our democracy by engaging individuals, organizations, and the media in
progressive solutions to racial, social economic and environmental justice today.
I'm very pleased to bring in one of our remarkable Founding Fellows, Dr.
Stephanie Kelton. Dr. Stephanie Kelton is the Professor of Public Policy and
Economics at Stony Brook University. She has also been a chief economist at the
U.S. budget committee, and has been an economic adviser to the Bernie 2016
campaign. I'm so pleased to have you join us here today. STEPHANIE KELTON: Thank you I'm so happy to
be here. Today we're here to discuss an area of
concern that many of us have experienced and many more Americans have: the
crippling issue of student loan debt. Tell me, how did you get involved in this?
So it's interesting. There was a couple
named Steve and Mary Swig, and they came to us a little over a year and a half
ago and they said to me, "I'm interested in this problem of student loan debt,
what do you know about it?" and at the time, this hadn't been an area of my
research focus, I didn't know a whole lot. But they became very interested in the
problem because they had a daughter whose friend was really struggling with
student loan debt. And when they found out the trouble that their daughter's
friend was having, they started looking into the issue and they couldn't believe
what they found. They had both gone to UC Berkeley when they were much younger and
it was basically free, they paid essentially nothing. And they just
didn't understand at the time how much things had changed over the years, and
when they realized they couldn't believe just how bad things had gotten, and so
they asked us to take a look at this issue. JANE: Well you've proposed some
pretty bold initiatives in terms of dealing with the issue. Before we get
to your solutions though, let's put the issue in context. How does it affect the
average American? Your report said that 44 million Americans are collectively
1.4 trillion dollars in debt. How did we get here and why? STEPHANIE: Yes so it's a
huge number. Nearly 1.4 trillion dollars is massive. That's now
more debt than people hold in credit cards. So there's more outstanding
student loan debt than there is credit card debt. That's something that's
new and it's obviously, you know, a huge number. And 44 million people, those are
just the people who are directly affected today. Those are the people that
are saddled with student loan debt that are trying to pay off today, but of
course they have spouses who are also impacted, even if they themselves
don't have student loan debt, and parents who are watching their own children's
struggle to pay back loans. And so you know, you hear 44 million, and that's
a huge number in and of itself, but then if you extend out to friends
and partners and parents and others, you're looking at you know a three-fold
(easily) increase over that number. So how did we get here? It's a long story.
Right, college costs have been increasing, and they've been accelerating at a very
rapid pace, states have withdrawn support over the years, pushing more and more of
the burden of paying for college on to students themselves, the federal
government has cut support. So it's just a lot of reasons why college costs have
increased and the burden has been shifted on to the student. JANE:How does that
compare with the median household income? I think I remember reading that census
data said that between 1990 and 2004 it only went up two percent.
How does that compare with the cost? STEPHANIE: Yeah, think about that, right? Our incomes
for the median person in the economy have risen very slowly, real incomes. Most
people have not seen huge increases in their wages and salaries over the last
many years, whereas college costs are just
outstripping the cost of almost everything else in our economy. So, if you
go back, you mentioned 1990. But if you look at what's happened from 1980 until
where we are today, college costs have increased 350 percent. People were paying
around $2,000 in 1980 to go to college, and today it's closer to $10,000.
So it's a huge increase while wages haven't done anything like
keep up with the rising cost of college. JANE: Right. And you mentioned family
involvement. I mean, I've heard from families who are trying to figure out
how are they going to help their elderly parents at the same time they're helping
their children, and then I've heard of other families where they say, "you know,
we can't afford to send our kids to college, we're still paying off our
student debt." So it affects the choices that people make and it affects
their futures. Do you write about that at all? STEPHANIE: We do. We speak to
this in the report. This is a truly tragic thing, these kinds of trade-offs
facing parents today. As you say, you know, caring for their own parents, trying to
figure out how to save for their own retirement, in many cases robbing their
own retirement in order to try to help put their kids through college. And
then the kids that come out saddled with student loan debt don't have a chance to
start saving for their own retirement. So what you have is this vicious cycle
where the kids today will be the elderly in the future who become dependent on
the kids of the future. And it appears that unless we do something to arrest
this now, this is a cycle that's going to perpetuate itself for decades to come.
JANE: What's the average amount of student debt for an individual? STEPHANIE: So a student
graduating class of 2017 is coming out with an average of more than $37,000
in student loan debt. And of course you know that's an average, so for
some students some it's less, but for some it's much much more.
JANE: And how
do you know what the average length of time it takes to pay off that debt?
STEPHANIE: It varies, but there are some studies that have looked at students who come
out of the University of Wisconsin System, and the average length of time is
just under 20 years for a student who borrowed in order to get a bachelor's
degree in Wisconsin. JANE: Unbelievable. STEPHANIE: Two decades of struggling to
pay off a bachelor's degree. JANE: Demographically, what groups are hardest
hit? Have you looked at that? Is there a big distinction? STEPHANIE: There are. Women bear
a greater burden when it comes to student loan debt than men do.
African-Americans bear a far greater burden than Whites or Asians when it
comes to the carrying of and depending upon student loan debt. Young people are
far more dependent, 63% of Millennials have student loan debt. And
that partly is a result, you know, around 10% of people 45 and older
have student loan debt, but you know, they're older, and in some cases
they've had a chance to pay back loans. But in most cases, they never had to
become as dependent on student debt in the first place because college was so
much cheaper when they went to school. JANE: The research report is entitled
"Macroeconomic Effects On Student Debt Cancellation," so let's talk about the
effect of the staggering amount of student debt on our country.
STEPHANIE: So that's really the question. We looked at this and we asked the question, it's a hypothetical:
What would happen if we removed this wet blanket? And in fact, the question really is,
is it a wet blanket? If you take off this wet blanket,
if you said, we're going to cancel $1.3 trillion in outstanding student loan debt, it's basically a clean slate for everybody who today has outstanding student loans.
What would happen to the economy? That was the question we were asking. So, if in fact things improve, then it suggests that the
existence of all of this debt is actually doing harm to the economy in a
variety of ways. So, if removing the student loan debt, if eliminating it
improves things like real GDP, unemployment rates, new business formation,
you know, household formation. People get
get married because they're not delaying these major life decisions
because they feel like they just can't afford to get married and start a family
because of student debt. So the paper is big. It's ambitious, and it's a
macroeconomic analysis. It is looking at the whole economy
and asking, you know, what would happen if we just wiped it all away? And
the answer is that there are a number of benefits to the economy, including: higher
overall real growth in the economy, lower unemployment rates going forward, higher
productivity rates, I mean just the sorts of things that the ordinary person would
think to tell you if you said what do you think would happen if millions and
millions of people who today sit down every month and write a check to pay off
a portion of their student loan, what if instead of taking out the checkbook and
writing that $350 check they could keep that money
and do something else with it. What do you think would happen? I think the
average person would tell you, probably spending on other things would go up.
Maybe people would go out and, you know, have a meal in a restaurant. Maybe you'd
go out and, you know, do some shopping in a mall. Maybe they would go out and buy a
new car, maybe they would. So you can you can imagine the sort of stimulus to the
economy as a result of freeing up that kind of disposable income for people.
JANE: So why is it allowed to continue? Is there anybody who benefits from this large
amount of student debt?
STEPHANIE: Yes, so at the aggregate level, the economy as a whole
pays a huge price because of all of this debt, but there are people who benefit.
And the prime beneficiaries are of course, the student loan industry. Those
who are making the loans, and collecting the interest in charging students fees
and penalties, and assessing, and that sort of thing builds up. And over time
they make billions of dollars off of borrowers. JANE: Do they have much of a
lobby down in --? STEPHANIE: They do in fact. JANE: What a surprise. STEPHANIE: Yes, so their interests
are well represented in Washington. This is not business that they're going to
lose without a fight. And it's very lucrative for them. JANE: We've seen some
attempts, but they're pretty minimal, to stop the crippling burden. There have
been loan forgiveness programs, allowing students to combine and refinance at
lower rates, but they're nibbling around the edges.
What you're proposing, cancellation of real student debt, will have quite an
impact. Those are good programs, you know, I don't mean to discount them.
But yours is a much more ambitious and comprehensive approach. How can that be
done? How can we cancel all student debt? STEPHANIE: So this is one of the things that
we do in the paper that takes up quite a lot of space because it's a big question.
And you say, how do you actually go about getting the getting the loans forgiven?
You know, who takes the losses? How do you take them off of people's balance sheets?
How do you tell people you no longer have to service this debt? You no longer
have to write that check? How do you do that? And what we did was look at this
from a couple of different ways. One is: most of these loans are held by the
federal government. They're held by the Department of Education, 90%, and the rest
are privately held. And so it's pretty easy to imagine how you could go about
forgiving the 90% that's held by the federal government. The federal
government simply says you don't need to pay these loans back, OK, we're cancelling
them for you. Now we can talk about what are the implications on the government's
budget as a result to that, because the government is not going to be collecting
principal and interest on those loans. And so, there's going to be some revenue
loss to the federal government. But the privately held loans are different. Now,
this becomes a question: what do you want to do with these? A lot of these are in
default already, a lot of students are having difficulty paying them back,
they're in arrears and so forth, and some of them are fraudulent. And this
is, this goes to this sort of thing that you sort of hinted at a second ago. You
know, you've had students win some victories with some of these for-profit
universities and loans that they took. That you know, they've convinced the
courts that this was fraudulent, and this is fraud, and we
shouldn't have to pay it back. And in some cases, the courts have sided with
the students and said, "you're right, you don't have to pay that back." So all
this privately held debt, what we did in the paper was say: let's assume that we
do the same thing we do for all of the debt that's held by the federal
government. We're going to pay it all off, OK, so everybody in a sense gets made whole.
And that includes probably some very bad actors, which if you think about it,
in one sense, it's kind of a deal for
them, because instead of having students default on their loans, they're gonna get
paid on all of these loans. The idea though would be that: no more.
No more going forward. So, what this paper sort of presupposes is that if you're
going to do something like this, if you're gonna cancel 1.3 trillion in
outstanding student loan debt, what you want to avoid is that immediately after
you do this people start taking on more debt. It starts accumulating.
And so how do you how do you prevent that from happening? And so what our paper
assumes is that this is rolled in at a time when public colleges and
universities are made tuition free. I think that you know, our belief is that
we're moving in that direction anyway. You see that in Tennessee, you see
that in New York, now you see that happening in California. And I think this
is a trend that's likely to continue. So, you know, you can't imagine doing
something like this and and getting, you know, a couple of generations of
Americans out of this student debt trap, and then immediately throwing millions
more into the queue where they start accumulating debt. JANE: Public colleges
and universities become tuition free, private colleges are still going to be
charging. How does this program affect that and the problem that you've
been talking about? STEPHANIE: In a sense, it would work like it does in some
countries where health care is made freely available to everyone, but there
is an alternative for those who choose to go out and pay on their own. So I
think private universities are going to be around, and for some people there will
be perceptions of quality, or for whatever reason they're going to choose to
go out of pocket and and go to one of these private universities. So I don't
think we're going to see them disappear as a result of this, but you're going to
have much more choice available for millions of people for whom college
would never have been in the cards. JANE: Now, one of the programs that the
government has done in the past is do loan forgiveness programs for people who
enter into community service, and then they forgive their loans over a 10-year
period. You're talking about doing this all at once.
What's the impact on the federal deficits? On inflation? On a number of the
issues that I mean, you know, I can hear the naysayers. They will show out there
in force saying this cannot possibly happen. STEPHANIE: Absolutely. So, that's one of the
interesting things that this research shows, and we did what we did was, we used
two different macroeconomic models. I'm not going to get technical, and I don't
want to bore people, but I think it speaks to the robustness of the findings
that we ran the simulations through two completely different models. And it's
sort of, it serves as a check on your results. And so what we did was, say again,
what would happen if we just forgave $1.3 trillion? Okay, and we used this model and
we used this model. And the models told us a very similar story. And the story is:
that the impact on the budget deficit would be rather trivial, around half a
percent of GDP. That's not too bad. So imagine, their budget deficit is 3%.
Now it's 3.5%. That's a pretty good deal for
wiping the debt away for 44 million Americans, right? JANE: And stimulating
the economy. STEPHANIE: And adding to real GDP in a way that puts you
better off than you would have been otherwise, reduces unemployment, so
the employment rate, if you like, is higher than it would have been without
the cancellation. The impact on inflation: now, if you had a terrible inflation
effect because all of a sudden people had all of this income and they spent it
into the economy, and the economy couldn't keep up and you caused an
inflation problem, you say: "that was a really dumb thing to do," but both models
tell us the impact on inflation would be trivial. In fact, the Federal Reserve
would probably tell you that they'd like to see a bigger impact on inflation
because the Fed's been struggling to hit its own inflation target. In other words,
the Fed wants more inflation in the economy than we currently have.
And so a program like this, while it doesn't add much to inflation (about 1/3
of a percentage point), it would help the Fed in a sense, achieve its own
mandate. So, on the stuff that you don't want to see happen, inflation and
that sort of thing, you get a very minor impact. And on the stuff you do want to
see happen, employment and output, you get a pretty significant impact. JANE: Good.
So we've talked about the individuals, we've talked about the country as a
whole, what about our society, our culture? Do you think anything would change in terms
of how people view schooling with more people going to college?
What kind of an impact do you think it might have on our society as a whole?
STEPHANIE: I think about young kids who are looking at college as something
that's further and further out of reach. They know that mom and dad aren't going
to be able to send them to the school of their choice, maybe not even be able to
afford the best local school in the state. And so, in terms of the aspirations,
in terms of what they're willing to work for, and fight for when they're going
through their grade school, junior high, high school years, to not believe
that at the end of that process that college is something, if you want to go,
that it's there for you. That it's attainable. And changing that in our
culture, and making it clear to young people that if you want to go on, if you
don't want to stop at grade 12, and you want to go on, we are there for you
because we know that the benefits of having you go to four more years of
school don't just accrue to you. You're not the only person who's going to
benefit from this process. Society as a whole is going to benefit from education as a
public good. And I think we've forgotten to think of education in those terms.
JANE: Yes, and I know we've worked together on free public tuition at public
colleges and universities, so that is an important aspect to this. Has this
approach worked elsewhere in the world? Are you familiar with any other
countries that have done this? STEPHANIE: I don't know of a country that has wiped the
slate completely clean with respect to student loan debt. Most countries don't
allow the problem to get to the point where where we've allowed it to get. In
fact, nobody else has the kind of problem that the US would be wrestling with with
respect to student loan debt. Other countries have done things like the
income based repayment programs, and gotten much more ambitious there.
The UK is just one example there. You take students and you say, alright you're
going to pay back this loan, but only for a period of time, and only really what we
think you can afford. So, linking it to their income, saying, you're not going to
pay back more than some percentage of your income.
Then, after a certain number of years we forgive the rest. So there are
cases where loan forgiveness is part of the deal, but I don't know of a country
that has gone all the way to say, you know, starting tomorrow everyone is
liberated from their outstanding student loan debt. So it would be a first. JANE: You say
that 90% of the student loan loans are held by the federal government, and then
you articulate the economic positives about doing it, and the very minimal
increase in federal deficits and inflation. It seems that the federal
government should be all over this. Have you found any support within the
administration, or Congress, or leaders, political leaders around the country?
I'm not speaking directly yet with anyone about the proposal itself. This
for us was just again, like a research question you know, that we were
interested in answering the couple that funded the study. They're politically
engaged and they are having these conversations, and from what I understand
they're seeing some traction here. And I can tell you that I've had emails from
people who are running for Congress who are currently elected, but part of the
platform that they're running on includes student debt forgiveness and
they are aware that I've been doing some research. So they're reaching out just by
email to say, "I thought I would let you know that this is part of my campaign
platform," which is kind of a cool thing. JANE: Excellent. So you're really having an
impact. So what do you expect to be the the biggest objections to this? STEPHANIE: I do
think that the biggest one, at least from the wonky types, is going to be the price
tag and the impact on the deficit. Even though the impact on the deficit is very
small. For some people, you know, there will be people who say we're not doing
anything that adds a dime to the federal deficit, or something like that. So that's
probably going to one of the main objections that people raise.
But other people are just going to take it from a more personal level and say,
"Hey wait a minute, I just finished paying off my loans last
year, you're kidding me right? This timing is terrible. I paid my loans
back. These guys shouldn't get a better deal than what I got,." Right? I mean,
you're gonna have people who who say that. "I worked hard, I paid it all down,
it's not fair to forgive these." And so, you know, what do you say to those people?
You did get a rotten deal. That's what I would say. I mean there was a period of
time where public colleges and universities were free or essentially
free, and we're moving in that direction again. So what you have are these people
who were trapped in between. They're trapped between what was a good policy
and what looks like it's going to be a good policy once again. And then you've
just got this this group of people who, you know, through no fault of their own,
got trapped by bad economic policy. Policymakers made a mistake, we should
have been out ahead of this, we should have understood sooner that, you know, a
high school degree isn't enough.That we needed to be moving in the direction
that other countries were already moving or had already been. Where they're
making investments in their people that go beyond the 12th grade. And we didn't
do that. And so we're writing wrongs. That's what we're doing with this policy.
And it in some sense isn't fair to the people who, you know, took on student
debt and paid it back. And they're out the income, and we can't wind the
clock back and make things right for them. But what we can do is make things
right for 44 million people today. JANE: That's a good answer, Stephanie. When I talked to
you as you were working on it, you were always giving credit to everybody
else as well, everybody that's been working on it. So I wanted to give you an
opportunity to talk about some of your colleagues and your funders, if you would
like. STEPHANIE: That is so nice, yes. This was a massive project. I mean, it took us
almost a year and a half to bring this whole thing to fruition. So, definitely a
group effort. I worked with colleagues at my previous University, at the University
of Missouri in Kansas City. I have a colleague there, Catherine Ruetschlin, who
was very, very important in this. She did great work. She had been at Demos before
and student loans and higher ed had been an
area of expertise for her. So I went directly to her because I knew she would
be invaluable on this project. Marshall Steinbaum, who had been
at the Washington Center for Equitable Growth and was doing work on student
loan debt there. I went to Marshall because I knew he would bring great
insights. And so Marshall Steinbaum, and my colleague Scott Fullwiler, who is
also at the University of Missouri in Kansas City. Scott helped a lot
with the macro modeling, and answering some of these questions that are very
technical in nature about how you actually go about dealing with, moving
these things off of balance sheets. And so, there's a big section of the paper
that's very balance sheet wonky that's Scott FullWiler's contribution. And
then we also had some help from a young graduate student named Joe Balagere
and he helped us with some research assistance, so thank you. JANE: Dr. Kelton, you
and your colleagues have broached the subject from a completely new
perspective, and we hope very much that it will be debated and discussed in the
halls of public policy, and that we have a lot of deliberations with this at the
center. Because I think what you've done is important, not only to the 44 million
people that are in debt, but the nation as a whole, and our culture, our respect
for education, for people reaching their full potential. So thank you very much
for everything you've done, and I look forward to working with you on this in
the future. STEPHANIE: Thank you, Jane and I do too. JANE: I'm Jane Sanders, I'm so happy to be here
with Dr. Stephanie Kelton on this important subject. Remember, a vital
democracy requires an informed electorate, civil discourse, and bold
ideas. We've certainly heard some of them here today, and we would like you to
become involved with the Sanders Institute. Please stay engaged
英語 - Edited Captions
The Sanders Institute Talks: Student Loan Debt
Hard to believe it’s been more than four years since @janeosanders and I sat down to talk about this @LevyEcon report on student debt cancellation. levyinstitute.org/pubs/rpr_2_6.p…
返信削除Stephanie Kelton
@StephanieKelton
Hard to believe it’s been more than four years since @janeosanders and I sat down to talk about this @LevyEcon report on student debt cancellation. levyinstitute.org/pubs/rpr_2_6.p…
2022/05/29 21:04
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