For five years, the Institute for Higher Education Policy tracked 1.8 million student loan borrowers who left school in 2005. By 2010, only 37 percent of these borrowers were current on their loans, the rest had gone delinquent on the debt, defaulted, had their loans put into deferment, or had been forced to take out hardship forebearances. 1.8 million borrowers is a very large sample size, and surely an accurate representation of all borrowers who left school that year.
And these numbers have certainly become worse, perhaps far worse. Consider: In 2005, undergraduate student borrowers were leaving school with something like $17,000 in loans on average. Today, that figure is doubled. More disturbing, however: national student loan debt was less than $400 Billion in 2005. Today, it is likely north of $1.4 Trillion- more than triple the 2005 amount. 2-year default rates, similarly, have shot up during the same time period (the true, lifetime default rate is likely approaching 50 percent currently).
While it isn’t much of a stretch to say that today’s student loan holders are in far worse shape today than what the IHEP study found, let us assume, optimistically, that the problem has not gotten worse. Given that there are 40 million citizens holding student loans currently, this leaves us with 24 million people in the country who are severely distressed by their student loan debt- 24 million people and their families. This is easily 30 million people for whom student loans are at the top, or near the top of the list of voting criteria. And don’t forget, we are being very conservative, here. This is the problem that must be solved. This is the “Trillion Dollar Gorilla”.
Despite all of this, we have yet to see even one presidential candidate address this issue directly! Sen. Bernie Sanders (I-Vt.) and former Maryland Gov. Martin O’Malley (D), for all the attention they have received for their “debt-free” higher education plans, would do almost nothing to address the problems of these citizens. The refinancing plans that nearly all the democrats have been touting are all but inconsequential, and would certainly do nothing to bring down the cost of college or the amount of debt being thrown onto the backs of the citizenry.
The loan forgiveness programs being touted by many of the candidates are a cruel joke on the citizens in the absence of standard bankruptcy protections. The Department of Education, which has no desire or intentions of writing off this debt, is administering like credit card teasers, where the vast majority of people signing up will be booted from these programs owing far more than when they entered (the Department of Education has, astoundingly, been making, not losing money on defaults for many years, and is doing everything to protect its institutional fiscal interests rather than those of the citizens).
While Hillary Clinton boldly promoted the return of standard bankruptcy protections to all student loans in 2007- a move that would immediately cure the structurally predatory nature of student loans and force the Department of Education to crack the whip on the colleges to reduce their prices and improve the quality of their courses- we have yet to hear her detailed plan for student loans. One would hope she would go much further than she did in 2006, but that remains to be seen.
The Republican candidates have, to date, been almost non-existent on this issue. Some have mentioned easing accreditation standards, making it easier to graduate, and some have even called for the end of the Department of Education, but NONE have put forth any plan that would address the problem of the 30+ million voters described above. This is a massive opportunity to actually take on one of the worst big-government monstrosities that has ever taken hold inside the Beltway, and a chance for them to demonstrate to the middle class voters that the “invisible hand” can and should work for them as well as the big banks (and in the case of Donald Trump, the candidate himself). Hopefully they will recognize it as such, but as with the Democrats, this remains to be seen.
By votes, this is bigger than the immigration issue, and on a par with the healthcare debate. These voters have seen the old rhetoric enough times to see through it. They are also smart enough to know when they are being thrown under the bus. Kicking the can won’t work any longer. We are at the cliff’s edge. If the presidential candidates on both sides think they can phone it in on this issue, they have another tough think coming.
Collinge is the founder of StudentLoanJustice.org.