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

 By Kimberly Harris, M.Ed.

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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