interviews
Who Profits from Your Student Loans?
by Cody Hounanian
September 27, 2020
This interview with Cody Hounanian, the Program Director of Student Debt Crisis, was conducted and condensed by franknews.
frank | What does the student debt crisis look like today?
Cody | I think statistics can tell part of the story. For example, in the seventies, you could use a Pell Grant to cover most of your college expenses, now you can’t. Anecdotes tell another part of the story. In the past, a part-time job over summer could be used to cover the cost of college. That is not enough anymore. We hear from borrowers every day who work many, many hours while going to school, and that still doesn't cover even a fraction of what higher education costs today.
As a society, we used to be much more willing to invest in covering the cost of education. Over the years, and particularly since the Great Recession, investment at the state, local and federal levels has decreased. As a society, we pulled back from investing in students and left families and individuals to pick up that burden. It's an investment issue. It's also a cost issue.
Can you speak more to the cost issue — why is college so expensive?
There are expenses to operate a major modern higher education institution — especially at the level that we have in the United States. But our political leaders have decided to not invest money into our higher education system, and, as a result, families and students have to pick up the slack and borrow to pay for college.
It is a vicious cycle — the more that colleges increase the cost of college, the more student loans will be taken out to fund those educations. The more that we open up the opportunity for borrowers to finance their education, the more room there is for institutions to increase their costs.
That is why at Student Debt Crisis we support a two-pronged solution. One, we need to cancel a broad amount of the student debt that exists. Two, we need to make many colleges, certainly public institutions, free for students. That is critical to creating a future where the student debt crisis that we see today can’t be recreated.
Do you think that canceling student debt is politically and fiscally possible?
If you accept the premise that our higher education and student loan system are broken, then you have to accept the fact that much of the $1.7 trillion in student loan debt is unethical, immoral, and, frankly, shouldn't exist.
Since the COVID crisis, canceling student debt has gone from a rallying cry of borrowers and advocates to something that is growing in its legitimacy. It has the support of many people in Congress, including Senator Elizabeth Warren, and even presidential candidate, Joe Biden.
But there are other common-sense solutions we should look to, as well. For example, there needs to be a federal refinancing option.
Because of predatory interest rates, many people have loans where they have paid back more than they originally borrowed.
Refinancing is not a new idea — people can refinance their mortgage or auto loans.
Let’s back up — what does refinancing look like for student loans?
Anyone that takes out a traditional lending product for their home or their car, can take advantage of a lower interest rate in the future. That helps them to lower their monthly payments and the total amount of debt that they have to pay back during the lifetime of the loan.
People who have federal student loans are not given that option. Importantly, federal student loan interest rates have fluctuated wildly over the years. There are millions of people that have very high interest rates, very high monthly payments, and no option to lower their interest rates.
With the support of folks like Senator Elizabeth Warren, there have been several attempts to pass common-sense refinancing. It came within two votes of passing in Congress several years ago but did not pass.
How many people are defaulting on their student loans?
A million people each year that default on their student loans. And that does not include a large portion of borrowers who are seriously delinquent on their student loans — these are borrowers who are between 90 and 270 days past due on their payments.
Unfortunately, we see that student loan defaults follow the inequity lines that we see in our society. Black student loan borrowers default at a much higher rate than their white peers.
We also know those who attend predatory for-profit colleges, often single parents, disabled veterans, and other vulnerable communities default at a much higher rate as well.
What happens when you default on your loans?
The consequences of default can be really catastrophic. It can mean huge fees. In many states, you can have your driver's license or your professional license revoked. It can mean that you can't complete your program or access financial aid. It can even mean you can't serve in the military, law enforcement positions, or other jobs that require credit checks. It can disrupt people's lives significantly.
As with other forms of debt, defaulting on your student loans also means that you're likely going to face relentless harassment from debt collectors. These are people that call at all hours of the day, they contact your friends and family, and sometimes they reach out to you on social media accounts. Defaulting can lead to a serious encroachment of your privacy.
Right. And there are repayment options to pay off student loans in an effective way — but no one seems to know?
Nobody with a federal student loan should default. There are affordable repayment options that are available to student loan borrowers through the federal government. The problem is, no one knows that these programs exist.
For example, if you are a low-income borrower or if you are unemployed, you can qualify for a monthly payment that's as low as $0 per month, and still be considered current on your loans. But your loan servicer has to tell you about that option and they have to help you enroll properly. For years, they have failed to do that. There's been a myriad of lawsuits against these companies, but that doesn't fix the problem.
California just passed a student loan borrower “bill of rights” to create enforceable standards. These companies have to give you your options, and they have to educate you on the best options for your situation, not the options best for their bottom line.
The federal student loan system is so complex that it makes it hard for students to navigate — you essentially have to be an expert. What's really important to know is that student loan borrowers are constantly hounded by what we call debt relief companies. These are people that prey on your inability to find any information. Any company offering to enroll you in a federal program with a fee is unnecessary - you can enroll in any federal program at the Department of Education's website at no cost.
But it's not just the private companies or organizations making a profit, right? In 2013, the Department of Education made over $41.3 billion on student loans. How are they making that money?
Yeah, you're right. Hundreds of millions of dollars every year go to the Department of Education through our student loan system.
Most of that comes from the interest on student loans. I think it is important to circle back to the conversation around the lack of refinancing here — we know that the longer that student loan borrowers are stuck with high interest rates, the more the Department of Education reaps in return. That is a perverse incentive.
Those funds go towards funding other government programs. To that extent, I think this is a question about balancing our books as a country and reprioritizing what we want to spend our money on. We need to think about different means of funding that doesn't happen off of the backs of student loan borrowers.
There's literally money on the table to be used to reinvest in education that instead is just being given as a fund generator for the Department of Education.
Can you talk more about the spread between what banks are borrowing and what the interest rates are there and how that differs from private loans?
Yeah. When you think of what a bank can lend money for, you're talking about single digits a — 1% to 0.5% of an interest rate. When a student loan is written by the federal government, it can be anywhere from about 3.5%, today's rate, to 6.5%, which was the rate that it was for me when I attended college in 2013. In the private market, student loan interest rates can be in the double digits — they can be as high as 15% or more.
Federal student loan borrowers, and those with private student loans from banks, are paying much more to finance their own education than what institutions pay to buy financial products. There is a huge spread. Again, I think that is a societal ill.
What does our society prioritize? Is it more important to keep banks afloat or to help young people afford education and make the future better and more bright for our entire country?
Why is the federal system profiting off of this system and these high interest rates rather than acting as a protector against predatory private institutions?
That's a great question. About a decade ago, when a student loan borrower went to the Department of Education for a student loan, the Department of Education would help facilitate that process, but the funds came from a private bank.
During the Great Recession, the banks unloaded this portfolio, they no longer wanted these loans. A lot of the loans were sold back to the Department of Education. From then on, throughout and after the Obama administration, all new federal student loans were not only facilitated by the Department of Education, but the funds themselves came from the government through the Department of Education.
The Department of Education shifted from being a regulatory agency, to essentially acting as one of the largest banking operations within the government.
They have a portfolio of trillions of dollars in student loans. Instead of acting as an institution meant to look out for the interests of student loan borrowers, they are now incentivized to look out for their large portfolio of student loans.
Was the transition of the government towards acting as a bank a partisan led movement?
The Obama administration felt strongly that borrowers needed an easy way to finance their education, or we would have a future where the future economy was void of high skilled labor and job opportunities.
We were also coming out of the recession, and there were deficit issues. So another motivating factor was also the idea of funding — the Department of Education could process these loans and create a revenue stream that could fund other programming in the government.
Do you think the move was well-intentioned?
I would say up until recently, these programs were well-intentioned. I think there were obstacles in making substantive change. But, since Betsy DeVos has become the Secretary of Education, we've seen more of what looks like overt attempts to make sure the system is as broken as possible.
I'll give you an example, there is something called the Public Service Loan Forgiveness Program. It started under the Bush administration, and the goal of the program was to motivate college graduates to work in public service by forgiving their student loan debt after 10 years of service. The current administration has proactively created roadblocks that have denied 99% of applicants to the program. There has been much more of an explicit attempt to prevent borrowers from accessing relief from the federal government — the likes of which we have never seen before.
Does the failure of the Department of Education lend itself to the idea that the government can't be in charge of things?
To those that look at the broken student loan system and say that is a great example of government failure, I would say, look to the other side of the coin — the exploitative private student loan system.
The federal government and the federal student loan system is not perfect by any means. It has created a lot of problems for student loan borrowers. However, the private student loan system that has no consumer protections when it comes to affordable payment plans. They have higher interest rates, they engage in profiteering, and a whole host of other issues that you don't see at the governmental level.
We look at the student loan system within the federal government and think that this is a bloated, broken system that can be corrected. It should be limited in size — meaning we should lower the cost of college and cancel a ton of the student debt to make this program more manageable. But we don't want borrowers to go to the private student loan industry where they lack the affordable options and consumer protections that are afforded to federal student loan borrowers. So the grass ain't greener in the private industry for student loan borrowers by any means.
Why do you think there's so much political resistance to embrace education as a public good?
This is where things are more insidious and, frankly, shameful. It comes down to the fact that there are partisan politics at play. There are some on one side of the aisle that treat a college education as something that should be reserved for the elites rather than as a public good and something that really benefits our society. At the Student Debt Crisis, we believe that America needs highly educated and highly skilled citizens who can compete globally for modern jobs.
interviews
In Conversation with LANDING STUDIO, Part 2
by LANDING STUDIO
May 12, 2018
This interview with Marie Law Adams and Dan Adams, the founding principals of LANDING STUDIO, was conducted and condensed by frank news. This is part two of an ongoing conversation between frank and LANDING STUDIO.
I heard you guys just won an award at APA.
MARIE: Yes, that’s our first recognition by a planning group.
You’re in the planning department at MIT, Dan directs the architecture department at Northeastern, your firm is winning planning awards. What does the tension mean to you? What does it mean to be in the middle of it?
MARIE: It's exactly what has defined our practice. Everything we're working on is at a moment of disconnect between something happening on the ground and something in policy.
We appreciate the pressures of environmental policy on infrastructure to push new ways of thinking about how these sites work.
I think that failure happens when the policy appears as a hurdle to industries. They hold off on improvements for as long as possible.
What the moment of departure for you in architecture school? When did you realize that your interest was beyond buildings?
MARIE: We both come from architecture programs that discouraged us from making buildings. It was more of a design-focused education. I think we took that to heart and never really invested in thinking much about buildings. Rather, what are bigger pictures that can be solved or addressed through design in some way.
DAN: I think it was revelatory to start our practice with this Salt Pile. To see a landscape that operates at one scale. But then witness this constant state of kinetics to realize that the landscape is overtly connected to the rest of the world.
Who is designing those urban relationships? What are the mediums through which to do it?
DAN: We always run into this scenario. We talk about our work and people reference projects like the High Line that New York. It's a very post-industrial. I think often that's where people see the role of designers: how to literally convert former industrial operations into a domesticated program for the city, for recreation. Rather than thinking about situating their work within the design of industrial operations themselves.
MARIE: A highway or bridge is filled with design constraints. They have different types of opportunities around them. Our design evolved as soon as we talked to the bridge inspectors. We understood how to support what they do but also allow public access to the community.
How do you define the community?
DAN: the definition of community is a difficult question on a lot of these sites. I think a lot of times there is some default conception that the community is the people who live within a specific proximity.
MARIE: Which it is…
DAN: It certainly is. But more and more we're coming to understand that these things are part of a broader, regional, and in fact global community, particularly when you're talking at the scale of infrastructure and industrial systems.
When you put it at the scale of the environment, a decision made in Boston must keep in mind the people in perhaps Yemen, where the natural gas is actually produced before it gets here.
MARIE: I think that comes into play through policy. The question becomes, how does that process work out on the ground? The communities that we do have access to are super local. But the policy advocates for the more regional impacts of these spaces. We try to negotiate those interests in the project.
How did the light installation change attention to the area from the community?
MARIE: We wanted the installation to start a conversation, and then see what happens. It led to some strange —
DAN: Observations…
MARIE: Mainly through newspaper articles. Local newspaper articles would poke fun at the project. And criticize the industry for trying to communicate back to the community.
DAN: But it also unveiled certain things. They interviewed people in the city. Different people had different responses, they would say things like “Oh I think this is great because I don't care about the lighting in this salt pile, but it brings more light onto the street. The street’s normally creepy and dark and it kind of helps address that issue.”
MARIE: Or “oh can we propose here?”
DAN: That's the weird irony. People used it as a platform to criticize the industry. And yet in the same article someone asked if they could propose on the salt pile. It immediately shows the conflicted nature of these things. Why people feel the way they feel.
This question of being part of a community, one way to do that is to hold meetings where people come and talk.
MARIE: And we do that.
DAN: Another type is to to actually work with people who are changing the light fixtures on the highway. We have spent nights talking with them about their job and what they do, and by getting to know them we learn about issues in the area.
MARIE: That's how we started our work with the MASS DOT [Department of Transportation]. They asked us to do a two week, temporary light installation under the Southeast Expressway in Boston. We ended up doing it for two years. Every two weeks to a month we'd go out there at night for six hours or so, changing the lights. We got to be intimately familiar with the light and the nightlife of the space. We saw it change dramatically in the few years that we were there.
DAN: That's a funny thing in the design world. How removed people are from the things they design. Our approach is to try and be engaged with the communities we're designing for.
MARIE: It’s challenging. It does take a lot of time to do that. The Charlesgate project is the first that was initiated from a community group. It feels like a different context for us because they've already got their own organizational structure around the place. They're doing tours and trying to bring people into the site. In some ways there is less burden on us to stir up activity, as we did in other projects. The more abandoned, industrial or infrastructural ones.
Can you talk about the dinosaurs?
MARIE: The dinosaurs are part of the Underground at Ink Block Project. The highway changes form—
DAN: We call one side the Fray. Like a fraying rope. All the strands of the highway spread apart. Water and light get down under the highway, and the area has no surface roads. It’s important to point out. People look at a highway and just call it a highway. But there are radically different architectures. The other side is what we call the Bundle, where all of the ramps compress into a really tight strand, about 15 lanes wide. It’s a 200-foot wide viaduct. There is no water or light. It has surface roads, so huge amounts of sound get trapped. Whereas in in the Fray, no sound traps. It emanates into the atmosphere.
Via Landing Studio. Boston, MA | 2016
The dinosaurs are an effort to make the experience of passing through that cave more pleasant. Essentially through lighting and art installation. But it is not a space to encourage people to spend time in. It's not really a pleasant environment.
But it is a route.
DAN: It's a route that's heavily travelled. The dinosaurs are meant to make passage less threatening. The other parts of the landscape address ecosystem performance and recreation. They encourage people to spend time. The design differences come from physical differences in the infrastructure itself.
Via Landing Studio. Boston, MA | 2016
Olmsted was trying to mask these ecosystem operations. Maybe now we’re more open to seeing how things work. How do you deal with people who call it ugly?
MARIE: We've been doing a lot of work with the Emerald Necklace Conservancy. The president, who's a planner, is frustrated by the fact that many Bostonians don't know that the Emerald Necklace is an infrastructural system. It was designed to manage floodwater and urbanization at a time when Boston grew really quickly. It's an entirely constructed landscape but it appears to be natural and pastoral. That English, picturesque imagery. It appears as if it was always there. Whereas other, more infrastructural environments like the highways are so clearly built by humans.
Image via LANDING STUDIO. Charlesgate. Boston, MA | 2017-Present
I think it became pretty obvious early on working with salt piles. You can't try to compete with that scale, or make things go away, or mitigate their impact. You have to just work with what's there.
DAN: Over the last 10 years it has become a weird kind of marketing. Typical condominium developments now embrace an edgy, industrial aesthetic. It makes people more apt to accept actual infrastructure and industrial systems in their city. It is challenging. On a lot of our park projects, for example, we want to use habitat-rich, native plants. But people say oh it looks weedy and demand that it gets mowed down, which eliminates the habitat. You realize so much of it is about perception of things.
MARIE: I find in the communities we work with that the perception of natural-looking landscapes is more controversial than the industrial relics themselves.
DAN: Joan Iverson Nassauer wrote a great piece called Messy Ecosystems, Orderly Frames. It is about how in cities, we try to hide from ourselves the things we don't like about ourselves. That operates on so many scales. It means that the oil refinery goes far away. Sewage goes down into pipes where you can't see it. We mow the plants so that they seem controlled and orderly. We sterilize things with toxic chemicals. All so that we don't have to confront the parts of ourselves we don't like. Some of it is probably a strange fiction we've inherited over time, through market and aesthetic regimes that we think are preferable now.
We now know how much of those are premised on really bad environmental concepts, global inequity and injustice. Even toxic chemicals to make things sterilized or to make neon-green lawns. It’s the same way we have to work against 100 years of problematic infrastructure development.
MARIE: I think the communication of intent is really important in a landscape that doesn't appear manicured.
Use your design education to change the narrative so that people think this is what they want.
DAN: At I-93 for example, we diverted the highway’s train leaders into the landscape. At the end of the train leaders there are rocky deposits that catch all of the cigarette butts, styrofoam, leaves, grit, and everything else nasty that flows off of highways. So you now have to see all of those things when you go there. But it also makes maintenance very easy. You just rake it out and put in a trash bag. It used to just go into the ocean, and that was great, right? Because the tide comes in every six hours and takes that stuff away. You can pretend it no longer exists because it's just gone.
MARIE: There does have to be a shift in what you want to see in public, open space in order to do this.
There's clearly a design intention to collecting all this junk in one place. Is it also intentional to have people see it?
MARIE: I don't think that our design team knew that that was going to happen, and we didn't really know either. It was something that we started observing once the project was under construction. All of a sudden we were like, ok this is actually interesting, that it becomes legible in the landscape.
DAN: Planning is flawed with concepts of isolation. This is where planning sort of undermines the value of design. As designers we believe you can design solutions to complicated things.
MARIE: That friction is really important though.
DAN: Planning aims to separate frictions. Like, oh it's a problem to have a refinery next to a community or an elementary school.
And the truth is, yes, it is. Either you eliminate that friction or redesign it. But the idea that those frictions somehow go away, just by keeping those places physically isolated, is a problematic environmental philosophy.
MARIE: You're starting this issue with Thomas Campanella’s essay and the fear of big projects. think today we're dealing with the legacy of those big projects, but can only do small projects to react to them.
In Boston, stormwater that comes into the city goes through a whole network of green infrastructure projects. You have to just operate in the margins.
DAN: There’s no one thing that could fix it all. Which is funny with something like the LA River. It’s a bit of a sick irony that in a city that is deprived of water, the fundamental principle managing water is to get it out of the city. And in that process, contaminate and kill any habitat that could be provided by the water. That's one of the strange philosophies of the last 100 years.
This is not totally surprisingly in the petroleum era: the idea that nature and cities are antithetical. We became enemies with natural systems and the goal was to flush them from the city, put them in the ocean. Yet for thousands of years natural processes are what fueled cities. This is what I mean by a radically wrong philosophy.
The industrial revolution and the era of petroleum was fundamentally about that. A source of energy more powerful than gravity, more powerful than the wind, that could let us do things no longer contingent on natural processes. And then that became the philosophy of cities. That we don’t have to work with these systems— we could actually work in spite of them. We are seeing the consequences of that now.