Forgive the interest!
By Kim Harris, M.Ed.
Distinctive Voice Consulting
July 2023
The Supreme Court’s
decision, among others this week, to strike down Biden’s student loan
forgiveness plan saddens me. But as I pan out on this issue, I should have seen
this decision coming. A plan has been in place for many years to build this
conservative court to rule accordingly. As I reflect on this week’s decisions,
I have become clear on America’s priorities: capitalism and democracy. If you
are a democratic country being attacked by a communistic country, the American financial
flood gates are wide open. If you are an American big business and your highly
paid executives ruin your business with poor decisions that threaten the
livelihoods of the middle-class worker tax base, be ready for America to “make
it rain” for you. But if you are a hard-working middle-class citizen, get ready
to get sandwiched in: by your debt and by your taxes. In my view, we the middle
class, are the backbone of America. America spends, we pay. If we middle-class
folks have a need, we have to take out a loan. The calvary isn’t coming for us.
The wealthy have tax shelters and the poor, well they have nothing to give, so
that leaves us hard-working middle-class folks to support the government. Heck,
even a former U.S. president stated that he is smart because he doesn’t pay
taxes which implies that we, the hard working middle-class, aren’t smart for
supporting our country with our tax dollars.
There are a myriad of
reasons why people carry student loan debt. I wrote about my reasons for taking
out student loans last fall and I will repost for you below. In this report
update I’d like to say that I am hopeful that America will be more equitable in
the distribution of its financial resources. Rich people don’t need to borrow
money to send their kids to college and poor people can rely on federal
financial aid. Everyone in between is left with loan options that are
impossible to pay back due to interest. If our nation’s leaders will not waive
student debt principal, at least forgive the interest!
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Student Loan Forgiveness from an Equity,
Diversity & Inclusion Lens
Fall 2022
Distinctive Voice Consulting
www.DistinctiveVoiceConsulting.com
After my
divorce I found myself in the position where I was a stay-at-home mother with
three kids to raise. At the time of my divorce, I had been out of the work
force for seven years and my skills were outdated. So, I decided to return to
college to earn a Master’s degree in education. I worked part-time and went to
school part-time while raising two school aged boys and a high school daughter.
I did this with little financial support which made things really tight. So, to
give myself breathing room, I decided to take out student loans to make ends
meet. I figured once I graduated, I could get a full-time job and pay back
those loans. I took out those loans twelve years ago and due to interest, job
lay-offs, and various other setbacks, I am still paying those loans off today.
For me, the $10,000 in student loan forgiveness is a blessing because that
amount basically covers the interest on my loans over the years. Having this
forgiveness waive my interest seems fair to me because I will pay back what I
borrowed. The tax payers will not be paying for my circumstances.
I share my
story to enlighten folks on the diversity of reasons for student loan debt. I
don’t know many folks who borrow money when they don’t need it so in my view,
there is a story of need behind every student loan. When I look at the
polarization on this issue, I see a political divide between those who support
student loan forgiveness and those who don’t: Democrat versus Republican. This
year, Rep. Mike Gallagher (R-WI), alongside Reps. Greg Murphy (R-NC) and Dusty
Johnson (R-SD), introduced the “Stop Reckless Student Loan Actions Act of
2022” bill. Among other things the bill would prohibit the president from
cancelling outstanding federal student loan payments due to a national
emergency and forgive $10-$20K in student loan debt for Americans making less
than $125K per year. I see two issues here: waiving interest on loan payments
during a national emergency and forgiving $10-$20K of debt outright. This bill
addresses both of these matters and claims that the forgiveness of interest and
payments during a national emergency disproportionately benefits higher income
earning borrowers. This may be true for people who earn more than $125,000 per
year and can afford to pay their student loans, but the second matter of the
$10-$20K loan forgiveness for people earning less than $125,000 per year does
not disproportionately benefit high income earners, but the contrary. It allows
for a break and financial support for middle class and lower income families,
and mostly people of color who are struggling to repay their student loans.
Across the
board, statistics show that:
· More than 1 in 5 U.S. families hold
student loan debt (totaling $1.6 trillion dollars)
· Black families borrow student loans
at higher rates than other races- and own more debt
· Many families where the student loan
borrower didn’t finish college, still hold substantial amounts of student loan
debt
· The least wealthy Americans are most
likely to own student loan debt- and owe more of it
What this
tells me is that those who oppose student loan debt forgiveness are waging a
war against Black and poor people in America. Biden’s student loan bail-out
plan is estimated to cost between $469-$519 billion dollars. It is quite an
expensive plan, but what will be the gain to the economy from these Americans
with this new financial freedom? Proponents of student loan forgiveness are
trying to kick start debtors’ lives by relieving some of the burden of student
loan debt. Many borrowers have put off starting families and buying homes,
activities that are the bedrock of feeding the U.S. economy.
Opponents of
student loan forgiveness assert that such a bail out would trigger inflation.
The jury is still out on this as economists are divided on whether or not
student loan forgiveness based on Biden’s plan would trigger inflation. And on
the matter of inflation, where were these fiscal stewards and their concerns of
inflation when the U.S. government funded the war in Iraq to the tune of $1.922
trillion dollars? A war over weapons of mass destruction that were later
determined to not have existed. Where were these stewards when the taxpayers
bailed out the banking industry in 2008-2009 with the Troubled Asset Relief
Program (TARP) to the tune of $498 billion dollars? Tax payers bailed out the
banks then the banks turned around and foreclosed on many of these same
taxpayers’ homes and 4,500 of these folks in the banking industry gave
themselves million-dollar bonuses.
It is quite
obvious to me that certain Americans favor supporting business over people. But
I believe we need to support both, fairly. Helping business does benefit
society because businesses employ people. Similarly, helping people benefits
society because people are consumers that spend to drive our economy. If people
don’t have jobs, they cannot spend. If people are in debt, they forego major
purchases and spend less. Both help our economy and are important. Supporting
student loan forgiveness benefits our society by helping relieve the burden of
all borrowers, but particularly people of color who borrow in greater numbers.
People of color who are aspiring to obtain an education to increase their
skills so that they can have a higher income, a better way of life and be
greater contributors to our tax base. I see great equity in helping people
educate themselves when they are not born with silver spoons in their mouths
and come from families that could not help them pay for college. Each borrower
has a story. Whether it is an immigrant that has come to America for a better
life, or a divorced parent who is trying to kick start their career, education
is a good thing and that is why I believe that student loan debt cancelation
for lower income families in an equitable initiative.
If you are
interested in training and more conversations about equity and inclusion,
please contact me at DistinctiveVoiceConsulting@gmail.com or visit my website
www.DistinctiveVoiceConsulting.com
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