Students Now Indentured to the Banksters

By Thom Hartmann

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Never in the history of the developed world has an entire generation had to go into debt just to get an education and a job. Until now.

Back in January, 31-year-old Tony Muzzatti, who at the time owed around $60,000 in student loan debt to Sallie Mae and always made on-time payments, was told that he had to immediately make a payment of $10,000, or face asset seizures . That's because his grandmother, who also happened to be his cosigner on the student loans, had just died.

Christopher Kibler was also told by Sallie Mae that he had to immediately pay back nearly $22,000 in student loan debts after his father, the cosigner on his loans, had passed away.

Muzzatti and Kibler are just two of the many victims of what the Consumer Financial Protection Bureau refers to as "auto-defaults," or when banks immediately say that private student loan debts are in default after the death or bankruptcy of a cosigner.

The "auto-default" practice is just one of the many ways that big banks and Wall Street executives are making billions of dollars off of an entire generation of struggling, debt-ridden Americans.

Right now, there's over $1.18 trillion in outstanding student debt in America.  More than 40 million Americans hold student loan debt, which is greater than the entire population of Canada, Poland, North Korea, Australia and more than 200 other countries. And of those 40 million borrowers, around 7 million have defaulted on their debt.

The average debt for a 25-year-old American student has risen a staggering 91 percent over the past decade, and the average college debt per person is over $23,000.

An entire generation of Americans is completely screwed, and is unable to start a family, buy a house, and build the equity needed to retire down the road.

This is a morally criminal conspiracy that's been going on for the past 33 years, ever since Ronald Reagan came to Washington, and it's been a three-step process.

First, as governor of California, Reagan did away with that state's free college education program, that let tens of thousands of Californians get an affordable and quality education. Others across the country followed his lead.

As soon as he came to Washington, Reagan continued his all-out assault on an affordable college education by slashing federal aid to higher education institutions across the country, including America's land-grant colleges that had been providing affordable and quality education since they were first established by the Morrill Acts of 1862 and 1890.

When Reagan came in the office only about 20 percent of the cost of college was paid as tuition; the other 80 percent was paid by governments and endowments. Today the numbers are almost exactly reversed and instead of government picking up most of the cost of tuition it is the students themselves.

Next, Reagan laid the groundwork for the federal government to get involved in the student loan business. Thanks to Reagan's new ed policies, the federal government had an incentive to hand out loans to hundreds of thousands of students, because the interest on those loans would become revenue.

Finally, our backwards trade policies that have been in place for the past 33 years have also devastated America's "lost generation."

Believe it or not, there used to be a time in our country when you could graduate from high school, get a good paying blue-collar job, provide for your family, and save up for retirement.

But thanks to decades of job-killing trade policies, that's no longer the case.

Now, in order to become a part of the middle-class, and to have any shot at living the American Dream, you have to go to college, strap yourself with tens of thousands of dollars of student loan debt, get a degree, and get a white-collar job.

The worst part of all of this is that we have done this to ourselves.

We have shot ourselves in the foot, by listening to 33 years of failed Reaganomics, and by buying into the idea that education should be a commodity and something that banksters can get rich off of, and not part of the commons.

It's time we own up to our mistakes, and start calling America's student loan debt crisis what it really is: A massive, devastating, trillion-dollar morally criminal conspiracy, committed by Wall Street banksters, libertarian billionaires and Reaganomics devotees.

Fortunately, we can undo a lot of this damage, and lift an entire generation of Americans out of piles of debt. It starts by declaring a debt jubilee on all outstanding student loan debt in America, and wiping the slate clean. Relieve millions of Americans from their crippling debt, so they can invest in homes, start families, and build equity.

And, we need to make a public college education free to every American who qualifies for it. If we can afford to spend trillions of dollars fighting two unjust wars, we can certainly afford to give all eligible Americans an affordable and quality education at a fraction of that cost.

Finally, we should turn our back on 30 years of insane trade policies and bring good paying blue-collar jobs back home. Let's make sure that an entire generation never again has to go into debt just to get an education and a job.

 

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Thom Hartmann is a progressive national and internationally syndicated talk show host and the New York Times bestselling, 4-times Project Censored Award-winning author of 24 books. 

 

 

 

Join us in DSA’s Drop Student Debt Campaign. Here.  

Individually signed posts do not necessarily reflect the views of DSA as an organization or its leadership.

 

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