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
An Interview with Dr. Patricia Parker
by Dr. Patricia Parker
September 27, 2018
This interview with Dr. Patricia Parker, Chair at the Department of Communication, Associate Professor of Organizational Communication Studies at UNC Chapel Hill, and founder of the Ella Baker Women's Center, was conducted and condensed by frank news.
frank: Can you give us a bit of background on yourself. How you ended up where you are now?
Dr. Parker: There are many entry points to that story, but the one I think is most relevant to the work I'm doing now is my family history. I was born in rural Arkansas into a family of 13 children. I'm the youngest of the 13. I was exposed to an older generation that was very much involved in activism. One of my oldest sisters was the first African American students to enter the local liberal arts college that was just a few miles from the segregated town in which my parents and their parents were born and raised.
By the time it was my turn to go to college, that would have been in the late '70's, my sister and seven siblings had forged that path. My oldest sister, Jurlene, and her peers and the civil rights activists at that time had forged that path. That is something that stayed with me. When I went on to get my master's and PhD degrees in communication, I was introduced to some theories including Black feminist theory and other theories about power and anti-racist work.
I was always interested in organizing processes (perhaps because I was literally born into an in-progress organization that was my family!) and that brought me to critical organizational communication as a field of study within the larger discipline of communication. That solidified my interest in thinking about organizing processes and leadership.
At the time I was getting my PhD, there was a focus in the literature on women in leadership and it was very clear that the women they were talking about were particular women—White, middle class women. My dissertation research was focused on African American women executives who had made it to the top.
I did a study with 15 women across the country who were representative of the women who had made it to the top ranks including the women in the President's Cabinet. They connected their own success, as I did, with the communities they were born into and the influence of the Civil Rights movement and the role models there. That influenced the book that I wrote about African American women executives and thinking about re-envisioning organizational leadership from the perspectives of African American women.
It was a bold thesis, but my thinking was influenced by people like Peter Senge at MIT, and others who were thinking about organizing as a process that takes complexity into account. One argument was that leaders who are able to lead complex systems themselves need to to have the capacity to “see” complexity; they need to have engaged with complexity as a frame of reference.
That set me on this course of thinking about leaders and leadership and social justice activism as intersecting with that process.
Do you feel that the personal is political?
Dr. Parker: Absolutely. That is a foundation of feminism in general, but in particular after I finished my first book and I had done that historical study of thinking about the traditions of Black women's activism throughout history, I was thinking about precisely what you're asking. How are young women - how are contemporary girls able to make those connections in terms of looking at their personal context and being able to connect that to the larger structural conditions that might be shaping their lives. That's what my current work is and I think that it's absolutely crucial.
Doing that historical analysis was when I got introduced to Ella Baker, the human rights and civil rights activist whose work spanned 50 years starting in the 1930's. She's most well-known for being the advisor and really the catalyst that made SNCC happen, the Student Non-Violent Coordinating Committee that's iconic from the '60's in terms of youth activism.
That is, we need to find ways to connect with the knowledge of people who are already living with and through particular articulations of oppressive conditions. Interventions become possible where there is an analysis of how capitalism and racism, and white supremacy, and so forth, are intersecting through people's bodies, in their everyday lives. Ms. Baker said, "If you give people light they will find a way." She also said that, "Strong people don't need strong leaders." Her meaning there was, people are already living through the impacts of capitalism and some of these other oppressions and that as experts, people who are doing scholar activism who have a particular analysis, our job is to work alongside the people who are already fighting it because they have a particular angle or vision. They have a particular knowledge that can be brought to bear in terms of social change initiatives.
My work with girls of color right now is founded on Ms. Baker's principles of what I call “catalytic leadership,” the topic of my next book due out in 2020 by University of California Press. Her approach is often referred to as group-centered leadership that is highly participative, but it is also grounded in a tenacious belief in community power. In Ms. Baker’s philosophy, organizing for social justice means catalyzing community power. My current work is founded on the staunch belief that girls are in the know. They know what's happening in their schools. They see the disparities in school suspensions and access to opportunities. They know what's happening in their communities because they're living it. Through the Ella Baker Women’s Center for Leadership and Community Activism, my students and I work with girls and their allies in communities to create space for girls to see their own power and to do some of the amazing things that they're already doing, but also support them with resources and mentoring.
The current cohort of leaders developed a project to focus on intergenerational storytelling. They planned and organized a “Girl Power Summit.” They decided that they wanted to have an all- women space for their mothers, their aunts, their grandmothers, their sisters, anybody who's interested in girl power, to come together to talk about their expereinces. To prepare for the summit, we did some of our critical pedagogy work, and the girls worked with arts activist Kayhan Irani to facilitate the gathering of about 30 girls and women in thinking about and telling our stories. They were amazing. These beautiful women, these grandmothers and aunts who talked about when they were teenagers and young women and going through their careers and some of the things that they faced, and this resonated with the stories that the girls were telling in terms of what they face in their classrooms, and some of the sexism that they face, or not being seen. It was just a really powerful convening of intergenerational storytelling. The girls decided that they wanted to expand on the project, so they are preparing to collect stories from women and girls in their neighborhood to do a more extensive action research project.
The personal does matter and it provides a route toward this kind of contextual understanding. This is actually one of the main themes of the book I'm working on right now — mapping these personal routes toward collective consciousness about social justice activism.
I think it's really astute to recognize that the people who you are trying to help are probably capable of helping themselves given resources — especially if you believe in this idea of power within ones own body and mind.
What do you think the younger generation should be focusing on? How can they take the lessons of somebody like Ella Baker and use them in 2018?
Dr. Parker: You know, it's a great question. It's the question of the day, right, because we have such courageous activism happening right now. The Black Lives Matter movement. I was just in conversation with the southern regional director for Black Lives Matter, a young Black woman. I don't know how many people know the three Black women, Alicia Garza, Patrisse Cullors, and Opal Tometi, who created #BlackLivesMatter as a response to anti-Black racism. DeRay McKesson is sort of the face of Black Lives Matter right now, which is another story we can talk about that sort of harkens back to Ms. Baker and Dr. King. By many historical accounts, Ms. Baker was just as influential on the Civil Rights movement as Dr. King. She worked more with the grassroots, he more so at the grass tops. That's an oversimplification and I recognize the great work that Dr. King did, but it sort of gets to this idea of the context of social movements and the erasure of Black women’s labor. There are some things that don't seem to change.
Have you heard of misogynoir?
No.
Dr. Parker: When Leslie Jones, the wonderful comedienne from Saturday Night Live, was viciously attacked on social media in 2016 a lot of celebrities came out to support her and among them was Katy Perry, who used the term misogynoir to explain what was happening. It's misogyny but against black women's bodies in particular. The woman who originally coined the term back in 2008, Moya Bailey, is a queer Black feminist scholar who wanted to describe the particular form of racialized sexism that Black women experience, especially in online media platforms, but also in everyday life. Katy Perry’s reference sort of took it to this other level of visibility. All that to say, there are some things, like misogynoir, that seem to get reinvented in different contexts across space and time.
Black women figure prominently in keeping that narrative alive because it started in the time of enslavement in terms of having to have this violence against black women's bodies in order to justify chattel slavery.
With the advent of social media, there is more access... tools for people to connect.
I think that there are some foundational activist strategies that are grounded in anti-racist work that has happened, that are always emerging from indigenous communities. I'm thinking about the history of black women's activism. And indigenous women all over the world. These movements all over the world, really I think connect on a certain level to a fundamental strategy which is to have an analysis of structural power.
We have to start with analysis of how power is inserting itself into our everyday lives. For me, that has to do with these different dominating structures of power. But having that analysis, then we have to have the tactics of educating people about how that's happening in their communities.
When a girl starts to wonder, just asking a question, "Why is it in my school, Black kids are being sent to detention more than White kids?" I mean, it's just a simple question. When she is able to do that kind of research and then starts to ask those questions, that's a structural analysis. So having that structural analysis is important. And then it's a matter of asking what is the point of change? I think this is where we get some sort of divergence because I know that in the Black Lives Matter movement, there has been so much emphasis on direct action which is bold and courageous and in your face. I'm gonna shut it down, right? How does that strategy work over time in terms of change? It takes such an emotional toll to continue to confront these persistent restructuring of state violence.
On one level this gets to the importance of self care in activist work; but it is also about how are the tactics of direct action fitting in with the larger strategy for change? To me, that's the question that all of us have to engage.
This is where I think we have to come to bear, in terms of trying to determine what are the strategies. Where's the point of change? Is it in these direct action tactics, sort of the social media campaigns and so forth, or is there a larger political strategy? I think it's a complex combination of all of these, starting with a structural analysis and then educating people to empower people to be able to see that analysis and then mobilizing people according to particular strategies, whether it's campaigns, voting, direct action. So that's my take.
How do you sustain engagement and energy over time?
Dr. Parker: Well, that's a great question because it speaks to what I was just talking about in terms of what is the overall strategy. I am very clear about what my intervention is in the general project of social justice and social movements.
I think it's the foundation of our democracy — and I'm telling you that I have never in the ten years that I've been doing this work, I have never encountered a girl who wasn't excited about this project. Who wasn't excited about wow, I have a space where someone is going to see me. Someone is going to listen to what I think and what I think is connected to something bigger in the world. But that's the project. That is so important because so much has happened on a structural level that gives the opposite message.
Nothing against Anthony Robbins, but this is not about finding the giant within. This is about understanding your place in history and in a democracy. It's personal routes toward collective consciousness. I can't repeat that too many times because it is really recognizing how we're connected in this project of social justice and equity.
That to me is how we keep it alive. In that regard, it keeps hope alive. So that's part one. Part two is that it's highly contextual. Part of the project is to reclaim a set of commitments to our democracy. This is where my communication background fuels my work. I understand communication as helping us to really facilitate those conversations about, what are our agreements in this moment, and maybe in this moment in history, but just in terms of thinking about who we are as a country, for example.
As people say, "Let's stay woke." Let's understand what's going on. That's the structural analysis. Then I will fight to stay connected to you in this conversation—especially if we disagree. That's what's in it for me is to know what our commitments are and if I know that you're committed to the same thing that I'm committed to ... and to me those commitments have to do with our values as a democracy. What do we stand for as a free republic? I think we go to that level of commitment. It's also about decolonizing. There are commitments related to dismantling the structures of white supremacy embedded in our institutions, our laws, our policies. So it's a particular kind of commitment. Being tenacious about staying connected with all the people who are in that conversation. People who disagree, who might be radically opposed to each other but find productive ways to keep the conversation going forward.
Do you think there’s a danger now of people feeling like they're participating because it's so easy to like something or share something or post about something? The illusion of activism.
Dr. Parker: Again, I think it has to be highly contextual. With any social action, it's going to be within a particular context. I think people have to be aware of, what is a social media campaign doing in that moment?
You should do the work of making yourself aware of all the complexities that are creating a particular moment. I think education is the key. Having that education about a particular issue. For Ms. Baker, it was always about tilting the power toward the people who are most vulnerable. Not acting unless you are able to get the context from the people who are being impacted by that particular moment.
Her approach to social change was about teaching and learning. So in other words, people should be able to educate themselves and others in terms of how social media might be moving something forward. They should also be teaching and learning about traditional grassroots organizing. There is so much more to learn in terms of actually engaging with people on issues. Being on the ground with people and learning some of the approaches to social movements in terms of doing a direct action but understanding what you're learning about, how that is teaching you to build a particular muscle in social change.