America’s student loan debt crisis is deforming an entire generation. Right now, America’s outstanding student loan debt stands at over $1.18 trillion. More than 40 million Americans hold student loan debt; that’s more people than the populations of Canada, Australia, Poland and 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 most of that is student loan debt. Student loan debt exceeds both credit card and auto loan debt in America, and the average debt per person is over $23,000. And, according to a study by Hamilton Place Strategies, by 2023, the average amount of debt that college students graduate with will equal what the median college graduate will earn every year.
That same study found that "average student debt at graduation has skyrocketed by 200 percent since 1993..." These mountains of student loan debt that are burdening millions of Americans are killing our economy, society, and even our health.
Last year, the New York Federal Reserve showed that there’s been an actual drag on our economy, just because of growing levels of student loan debt. Americans with piles of student loan debt have less money to spend on anything from consumer products to homes. And as The Washington Post points out, first-time home buyers, usually college graduates, are, or at least used to be, “the bedrock of the housing market.” But, since millions of college graduates are drowning in debt, they can't afford to buy a home, which is killing America’s housing recovery.
Meanwhile, according to a report from the One Wisconsin Institute, the devastating effects of student loan debt also translate into more than $6 billion in lost car sales each year. And, the chief economist for General Motors has even said that student loan debt is one of, if not THE major reason why millennials aren’t buying cars.
Student loan debt also keeps Americans out of good jobs. When a person defaults on their student loan debt, their credit rating plummets. And, unfortunately, many employers today run credit-score checks on potential hires, which means that the millions of Americans who have defaulted on their debt, and who therefore have rock-bottom credit scores, won't get hired.
But student loan debt isn’t just having devastating effects on our economy. It’s also contributing to a variety of social and health problems too. Student loan debt is causing Americans to start families later in life. A report from the economic forecasting firm IHS Global Insight found that between 2007 and 2011, while other forms of debt were falling, student loan debt was steadily increasing.
As IHS points out, during the same time period, the median age of a first marriage for men went from 27.5 years old to 28.7 years old, while for women it went from 25.6 years old to 26.5 years old. Similarly, the IHS report found that fertility rates, which are defined as the number of birth per 1,000 women aged 15-44, decreased substantially from 69.3% in 2007 to under 65% in in 2011.
And, as multiple studies have shown, when women have children later in life, there is a much greater risk of the child being born with a things like autism or Down’s syndrome. A 2010 study found that mothers over 40 had a 51% higher risk of having a child with autism compared to mothers aged 25 to 29, and had a 77% higher risk than moms under 25.
Meanwhile, suicide rates and mental health illnesses are higher for people struggling with debt. After the banking crisis struck Europe, suicide rates skyrocketed across the continent, because people couldn’t handle living with their debt and the austerity policies that the banksters running the EU and the IMF forced on them.
From hurting our economic recovery to influencing the numbers of children born with autism and Down’s syndrome in America, it’s clear that the student loan debt crisis is having some pretty devastating effects on our society and way of life, and that something needs to be done about it.
That’s where Senator Elizabeth Warren comes in. On Tuesday, Warren, along with many of her fellow Democratic senators, introduced the "Bank on Students Emergency Loan Refinancing Act." The act would allow Americans with outstanding student loan debt to refinance their debt at the lower interest rates we have right now.
Today, many Americans are struggling with student loan debt at interest rates of 7% or higher on their loans. But, new students taking out loans are paying rates as low as 3.86%, thanks to the Bipartisan Student Loan Certainty Act which was passed by Congress last summer. Warren’s "Bank on Students Emergency Loan Refinancing Act" would let Americans with outstanding student loan debts at higher interest rates to roll over their loans at the newer, lower rates.
In a press release on the new legislation, Warren said that, “Exploding student loan debt is crushing young people and dragging down our economy. Allowing students to refinance their loans would put money back in the pockets of people who invested in their education. These students didn't go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America.”
America’s student loan debt crisis is like nothing our country has ever seen before. Over a trillion dollars in debt is deforming an entire generation, crippling an economy, and contributing to a wide variety of social ills and health problems.
Fortunately, people like Elizabeth Warren are taking the bold actions necessary to lift millions of Americans out of debt, so that they can be active and contributing members of our society and economy. And it's a great start. But if we could spend several trillion on wars in Iraq and Afghanistan, why not - now that we're winding those down - use that kind of money to pay off all the student loan debt out there altogether, with a debt Jubilee?
Students shouldn't have had to go into debt to go to school in the first place! Before Reagan, college was free or super-affordable in almost all of America. Let's wipe the student loan debt off the books, and end future student loan debt by investing in our intellectual infrastructure like we did in the middle years of the 20th century, when the number of college graduates in America more than doubled and there was virtually no student debt.
Instead of exploiting the newest generation of Americans, lets invest in them, by making all public universities and community colleges free. It worked like a charm after World War II and built America. We can do it again!