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tv   After Words Josh Mitchell The Debt Trap  CSPAN  September 13, 2021 1:01am-2:01am EDT

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journal reporter josh mitchell talks about the growing debt for parents and students. he's interviewed by npr education reporter, afterwards weekly interview program and guest host interviewing top nonfiction authors about latest work. >> i'm so excited for this conversation, josh. this is awesome. >> same here. same here. >> definitely. so, you know, you've written the book the death trap. it's a really impressive, comprehensive book and you mentioned that you did 8 years of research on it and i just want to neglect, like, what sucked you in? >> well, actually almost 9 years because it was in 2012. i was just an economic's reporter at the time and i as part of, you know, a story i was doing on deadlines, this consumer agency put out this report, this consumer financial protection agency put out this
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report saying students that exceeded 1 trillion. i read story that said that and i got a ton of attention. the story got a ton of attention, the readers clicked on it and started to e-mail me and just from there i just want today write more, more about it, about why student debt was rising and what was driving that and the more i wrote about it it was like the snowball effect. whenever there's a lot of money involved there's always a lot of stories to write and the more-ii want to write more about it. >> absolutely. numbers are pretty eyepopping. >> closely getting to 2 trillion. >> yeah, absolutely.
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so what are the entertaining parts of the book is the early years and you go into the -- the comedy of errors that brought. >> right, first of all, that really kick started this
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conversation. not one that is as big as the one that we have now but basically the idea is let's try and get more scientists into college or let's try and train more people through college and so the goal was kind of a very specific goal at that point. it wasn't -- everyone needs to go to college and we need to make sure that everyone has the option to go to college, more like let's get more scientists and so that we can beat the space race and then from there, very quickly higher education became linked with this goal of, you know, trying to reduce any quality in the united states. lyndon johnson made it part of great society program where he
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really wanted anyone who needed a loan to have a loan and i think every step along the way there were good intentions but the way congress designed this program, i don't even think they knew what they were doing a lot of the times. it was just kind oflet take the noble goal of expanding access to hire education. let's do it in the cheapest way we can think of and i think that was the tension. let's do something that is a really big noble goal but let's like try to do it in the most affordable way, cheapest way possible and that's where problems started to happen. >> yeah, yeah. so that's what's interesting about it.
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>> is it okay if i geek out a little bit? >> i want to geek out. >> here is what is interesting, federal spending was rising really quickly in the 60's, part of was the vietnam war was happening and another part of that lyndon johnson as part of great society programs really expanded the role of congress and washington and all facets of life. >> medicare. >> yeah, there was a lot of stuff going on. >> lyndon johnson, it's interesting when he studied the characters, he had these goals and ever since apparently he was in college he was always in a rush and so he really wanted to
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solve inequality and address the big problems and a quick way. again, good intentions but one of the things i learned that if you do it too quickly, problems start to come up. why did the banks get involved? this is a key point in the program. the federal deficit was rising quickly because of all of the spending. and there was a concern as there has been in over 20, 30 years, if deficit rises, there could be all the other things that happened that could affect the broader economy. there was a thinking that big deficit is bad. i'm geeking out here but it's important. >> yeah. >> the way the government did accounting if you generated a billion dollars of student debt and you gave students $1 billion, federal spending would rise by that much.
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and then -- in that one year. so the program looked very expensive when you gave students loans. and when students paid them back ten years out or whatever, then spending would slow down because that would be counted. anyways, the important thing to know is having student loan on government's books looked very expensive and so lyndon johnson came up with this idea and it wasn't just him but others but basically the idea was let's just have banks make loans to students, therefore, no money has to come out of the treasury at least on the front end and so if banks are doing it, then it'll be off our books and federal deficit would be unscathed. this sounded good at the time. banks do do things for the good of their heart. they want to make money. if you want to do this, banks
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ended up making a lot of money in the long run. they didn't want to get in the business of student lending. >> you can draw a parallel, right, with the government sponsored entities like fannie mae and freddie mac. >> right, right. exactly. and that is a very good point. there was already a model that existed going back to great depression where the government because of what was happening in the great depression with the housing market and everything else, really started to try to use taxpayer money to incentivize banks to make home loans to households and so there was already this existing model and lbj want today basically adopt the model for students so what ended up happening in the name of reducing federal
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spending, he actually -- he and congress actually increased federal spending because in order to get banks to make loans to students not only did he have to say taxpayers would cover the loss whenever students fail today repay, congress actually had to guaranty banks a profit. ask it was like sort of a double form of insurance. not only are you agreeing to cover any losses, you're actually going beyond that and saying we will pay you for every student loan that you hold. it ended up becoming a very expensive program in the long run but when you're passing the federal budget each year it looks -- it looks like a smaller hit in that year and subsidies you're giving the banks plus the potential losses that you're going to accrue when students don't pay, those don't show up all at once, they show up over long periods and so it looked cheap near the short run to do it this way and actually created a halt on problems in the long
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run. >> talk about who showed up at the casinos the make all the money, talk about sally may. >> let's talk about sally may. what ended up happening in the 60's, the government said we will ensure all of these loans. now, congress got the interest rate at which student loans would carry, right, and so congress would cover part of that interest while students were in school and then after school students were supposed to pay the interest themselves and that would go to the bank for reimburse the banks for extending the loans. inflation was rising at this point to the extent that that really drove up the overall cost of banks. we need more money from you.
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>> interest is going up, inflation is going up, the cost of borrowing is going up. it's the 70's. mortgages are 14%, it's crazy. >> totally, totally. the whole purpose of banks is to make a profit and, again, lyndon johnson, you know, is saying make loans and they are saying give us more money and we will. and the problem was congress kept on raising interest rates and inflation kept on going higher so it was like sort of like this -- it kept on going on and on and finally they said, here is what we are going to do. in 1972 we will create a for profit corporation called sally may but it not only for -- not just a for profit corporation, it's actually going to have access to super cheap money from the treasury department and they will use that super cheap money to give to banks which could then give to students.
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and then sally may the way they gave this money, the banks, they would buy existing loans off of the banks books so any time the bank made a loan to a student sally may would slip in really quickly and buy the loan off of the bank and then hold the loan or sally may would also make just loans to banks and so sally may had all of the powers, almost all of the powers of the treasury department but none -- but it was a for profit corporation and this was the mother of moral hazards, of everything congress has ever done i think this is one of the ten most weirdest things congress has done. guess who owned sally may, banks and schools. it's like the fox living in the hen house, not just watching the hen house. the institutions that, you know, needed to make money and want
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today make money suddenly had access to all of this treasury department money, no risk whatsoever, called sally may. ly stop there because it's a long story and i'm curious if you want to know more about them. >> yeah, yeah. we are talking about moral hazards and independent consequences and just to catch us up, federal government wants to send kids to college but doesn't want to pay for it. they don't want to be seen paying for it. it's not on their books. sally may gets created as basically profits are guarantied and losses are erased and they have every power the federal government has. the federal government money and the federal government rate. now a new kind of actors come in and these are the colleges themselves.
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they were supposed to have skin in the game. talk about that and talk about what happened instead. right around this time there was this big debate going on in washington about how the country should finance. this was a parallel about whether salliemae needed to get involved. the discussion is really a lot like the discussion we are having now which is should the country have free college or should we continue just to give students what is a essentially a voucher which by voucher i mean like a student loan. right now the policy is you have a pell grant and you can use as voucher to go to any school that you want to. back in the late 60's, there was a big debate about which system was better. and ultimately the johnson administration including an economist, she's no longer here but she helped decide what to do
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here and the idea was if you give students a voucher, colleges will be forced to compete over the voucher and therefore that would force them to keep their prices in check. [laughter] >> right, so they wanted to treat college like any other marketplace. like if you were in the market for, i don't know, apples or books, you know, you want companies to compete over customers and so companies have to become very creative in how they run things and what they offer, the quality of the product that they're offering and they also have to compete on price. the opposite happened in the 80's, colleges very quickly learned that -- actually if you charge higher prices students will think you're a higher-quality school and so colleges instead of competing on price competed on prestige and there's this notion that -- that -- that it's called the regal effect. it refers to a whiskey.
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it's a theory that says, you know, if you're a consumer and go into a store and you're in the market to buy, to buy whiskey and you see two brands on the shelf, one is cheaper and one is more expensive, you are automatically going to assume that the more expensive one is more high-quality and if you're high-quality whiskey to pay more money even if it's not necessarily a good product. you're still going to end up paying for it. that's what happened in the 80's with colleges. again, they started to raise their prices and they were vetted by the school programs and schools are raising their prices and how do students raise prices if tuition is rising faster than family income. well, the loans fill that gap. >> like they are -- they have other streams of even federal
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funding, research funding, they had -- they have public funding and so they're assembling all of these and there's some theories that basically colleges raise all the money they can and spend all the money they raise. >> yeah. >> and we are not even talking about fore profits. talk about what happened in the foreprofit sector. >> because you had vouchers where students could use them anywhere they wanted, the public school system wasn't keeping up with growth and the number of students. there was a lot of schools being built to accommodate that more and more people were entering college but one thing happened that led to rise of for profit colleges. a lot of schools weren't growing for the rise of the students.
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>> okay. >> and so for profits schools -- i'm sorry, were you going to say something? >> i wanted to bring demographics. 70's, 80's, you have more women trying to go to college, members of racial minorities, market changing and more people need college education and 70's and 80's public spending and community colleges that have been growing, they are not growing fast enough. >> right, and also a little bit of a tangent but i think it's really important here. early 80's recession is really when the college wage premium opened up. it went like this. you had college -- the wages of college graduates shooting up and the wages of nongraduates shooting down over the next ten years or so. >> the reagan union busing and decline in manufacturing and because of the transition to the knowledge based economy.
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>> totally. all the tech companies they started getting started in the 80's and the early 80's recession itself, a lot of businesses had held off investment during that era of translation. as soon as paul and the fed conquered inflation and brought inflation down businesses started to invest again. so you -- these companies suddenly needed workers who were more skilled to operate this new text and, yes, all the other factors that you just said were at play here as well and so this is when demand for college graduates really went up and demand for nongraduates started going down which -- go ahead. >> but like you just said the public colleges don't necessarily want to open the doors to the newer untested students because what are they doing, they are climbing the prestige ladder and advertise that they have a better graduation rate and lower
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acceptance rate so they're not necessarily making spots for these students? >> right. private colleges were doing more of that. first ones to engage in this prestige game. yeah, and so, you know, what ended up happening was there were for profit colleges start today prop up, going after gi -- people with a gi bill money, you know, gi bill money as well as money and grants and so there are all the for profit colleges that prop up and in large part a lot of them wanted to take advantage of all this money that the government was putting in the hands of students but they also were serving a purpose in that if you are a blue-collar worker in the middle of the country and maybe you don't live near public two-year college and you can't, you don't have the grades to get into a four-year
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college or maybe you're 35 year's old and, you know, you just don't have any higher-education training whatsoever but you want to go back and learn new schools, the for profit colleges start today fill in some of the gaps that were left with -- that were left by the public system or nonprofit system. this is after world war ii. same thing that happened in the 70's. the government expand aid to veterans and there was a for profit crisis in the 80's. one to have most fascinating things i found and reporting this book is that a lot of the problems that we have seen in the past 16 years happened on a smaller scale in the 1950's, 60's, 70's, 80's. >> that is super interesting, right. so the colleges pop up. they are taking advantage of the fire hose of must be from the
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government and what are some of the practices? >> well, schools called correspondence schools. they are basically online schools before online schools and mail you stuff to, you know, read and do homework on and then, you know, would charge a lot of money and students and they told students they would have a really good shot of getting a job after words and a lot of time they would default in their loans but, again, the way sally may and the student loan program was set up, they didn't really suffer consequences when the students failed. students were on the hook for the money or taxpayers were on
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the hook of the money. a lot of the nonprofits that are now were back then. >> yeah, yeah. you had asked something a couple of questions earlier that i think applies here and i wanted to mention this when you say colleges in general whether it's for profit colleges or state colleges or private colleges, you know, have -- they have enough skin into the game. a lot of colleges themselves would make loans to their students. >> yeah. >> because it was the college's money if the student defaulted, the college would have to eat the losses or at least some of the losses. >> incentives, right, you want to provide a program that's giving value to your students and standby your product. >> yeah. exactly. i've always asked college presidents if you're so
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confident in the product you're providing, why do you need the government to give you so much loan money and why don't you put up your loan money and endowment money and lend to the students if you're so confident they are going to come out and get a great job and be highly paid after ward and share some of that risk. and so they were doing that. there was this program and it was a very -- the default rates were very low and one of the reasons why congress agreed to create the very first loan program is because it's official from the university of minnesota, he told congress, you know, loans are good investment for students because they default at very low rates but, again, i think that's because one of the reasons is that schools were on the hook if students defaulted on the loans. as soon as you take the risk off of schools of suffering any losses, that's when a lot of the program started to arise.
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>> i agree with you there. college education is not just a financial investment but also public good and when universities made personal decisions about who to lend to, didn't they often time choose people that perhaps looked like the university administrators and people that came from good families, that were white, perhaps male and choosing lucrative specialties as well. >> yeah, this is the ultimate tension of any type of loan program like this. yes, there was a private sector loan program before lyndon johnson program was passed by congress in 1965 and it was growing really quickly but you had, for example, a dean from howard university, historically black college here in dc tell congress, look, this program is great except a lot of the students don't have access to it. a lot of our black students just don't -- banks aren't making them loans. and so while this program is
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serving a lot of people, it's not serving everyone including some of the people that need loans the most and so, again, that was the big tension behind whether you have a program with underlying standards and program that restrict who is can get loans versus federal program with lyndon johnson, let's have everyone have access to the loans. and so we never resolved the question, i think, as -- congress has never resolved the question of at what point are you republican students versus harming students by giving them loans if you know that they are very likely to default on them. if you are giving everyone a loan, you're expanding access and on the other hand you're setting up a lot of families to default down the line if you don't look at things like how able are they going to able to repay the loan, if it's $50,000 versus what their income is. that's been a tension throughout the whole history of the program. >> absolutely.
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italiaers onto kind of higher education in general like who needs a credential to get their foot in the door versus managers will take a chance on. women are really strive to go achieve more and more higher education but they are not seeing the pay off in pay, commensurate pay. same thing for black women in particular who are getting a lot of ph.d's but not necessarily getting the payoff. >> when lyndon johnson program got started in 1965, congress and -- and president johnson would say that they wanted poor people, modest income people to have their education covered by
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grants. loans became an easyoption. and that happened more and more and more and it happens now. every year or reauthorize higher education act they talk about pell grant which are intended to be scholarship money that doesn't have to be repaid, modest income students but congress never really increase the pell grant over time. i mean, they did but it didn't increase nearly as quickly as schools were increasing the prices and so there's been this on what the pell grant covers and what, you know, poor modest income families ability to pay is. so loans just became the easy option to fill that gap. >> right.
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fair to note that it's hard to subsidize your way into affordable if higher education institutions keep rising prices, right? >> yeah, yeah. exactly. this is all -- a lot of it is risk. how do you build in risk so that you don't create this moral hazard of colleges just having the incentive to raise prices the more the government puts into family's hands. >> right, right. we will talk about this later but really the problem can college proposals. but, you know, some states or subsidizing public education at a much higher rates than others and leveling the playing field at the expense of the places that have been making a better effort already.
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>> so the main character in my book, it's the woman who is a single mother of two in pennsylvania and she was a secretary in the early 1990's and she really felt like she was in a dead-end job and she basically was if you look at what was happening with the wages of nongraduates they were going down and she was feeling that. and so she had the epiphany one day at work and i'm tired of living the lifestyle. she said i'm going to go the college. college is clearly the answer and so she worked in a law firm at the time as secretary and across the street from her law firm was the private college called dickenson and it was close to work and very was convenient and walked across the
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street and one day after lunch, yes, we would love to enroll you and it was like -- she said, i don't have money to pay for this, basically don't worry, you can take out student loans and this is a good investment. this is good debt. she said she didn't think twice about it and he and behold she wanted to be a psychologist in new jersey and learned quickly that in the state of new jersey, she worked in new jersey but she was from pennsylvania. so that's why i mention two different states that she had to get a ph.d. and that ended up being
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expensive. they did the credit check, no review of like how much she would earn after ward and the debt she was earning was too high. he comes out of school in the early 2000's with $120,000 in debt and a quarter of that was -- about a fifth of that was interest only because the government, again, had been charging all of this interest including while she was in school in part to reimburse the banks and salliemae who was her lender. and so she had this huge bill and it was just like quick sand. she kept on paying month after month and it just wasn't going down. she had to take one year forbearance. adoption of us pending payments because her estranged husband at the time had stopped paying child support and had two young children and life happens. it was either that or one time
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tree fell on her house and at the same time paying money towards loans and got to the point where after 17 years she still owed a hundred thousand dollars even though she had basically paid back all of the money that she originally borrowed, the interest had been accruing and this is a 30-year loan and she couldn't keep up with the bill so she filed for bankruptcy and the government, i will hold off and telling you what the final outcome is because that's the end of the book and i will tell you a good example of someone who was trying to do everything right who was really putting her faith in all of these big institutions, college, grad school or congress itself and just really was working hard to make things right and really ended up harming her in the long run. >> yeah, that's something that hit home to me and this is the
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moment to mention that i also wrote a student debt book and what's remarkable it came up 15 years ago and so much has happened since then but it was already the time that i was writing about student loans two-thirds of all undergraduates and in 7 or 8-year period. we were seeing some of the issues and problems coming up and i'm curious kind of like what your thoughts are about how the politics of student loans changed during the financial crisis and then kind of occupied debt, student debt and how they became a bigger and bigger issue on the national political scene. >> right, so i think up until the grate recession loans were, again, seen like this investment and i think some people were complaining about student debt but really loans were seen as the ticket to the middle and upper class, you know. it was a good investment.
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>> i was -- i'm a little bitter because people were definitely like this is not a big deal, millennials are so entitled, what are you complaining about this. debt is all good and there was this mentality at the time and people were buying houses with 0% down and hey, your salary is going to be great with the vouchers degree, so why are you even complaining and never mention the people who don't finish their degrees. people that default are not people with a hundred thousand dollars as horrible as it is but the people with a few thousand dollars and no degree. it was part of the financial crisis. this whole mentality of free money was part of the financial crisis and that we are going to patch safety net with cheap lending and instead of actually spending and goes all the way to war on poverty which is fascinating. >> well, totally, the 1990's is really when the whole idea of consumer debt took off and it was interesting i point out an irony that during the clinton
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administration, you know, there was this huge focus on reducing the federal deficit and debt at the federal level but then like telling consumers, getting into debt for houses and college is great, you know, and it was like one form of debt is considered really bad and another straight investment and that was only the reasons why congress, you know, sort of expanded these loan programs, for home lending or at least expanded its presence in the loan markets was because, again, they saw the form of debt is a good debt and you see consumer debt really start to take off in the 90's and especially in the 2000's and in the 90's when i grew up, college was just seen as like you just had to go and the more schooling you got, the higher your chances were of getting a good job and there wasn't any
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question about college was a risky investment or not. and so the great recession is when all of the forces kind of converge. you had tuitions rising at the triple rate of inflation and -- >> hold on. triple the rate of inflation. >> i know. yeah. >> you have to take a moment. >> yeah. it's insane. not only that but textbook prices were also, i mean, it's just like there's other fees and price that is we don't think about aside from tuition and they had been skyrocketing and, again, they had been rising faster than median income and so whenever that happens, you have to find some way to pay for it and student debt became the way to fill that gap and so that had been happening and finally tuition had very high level. then the great recession happens. the great recession was just --
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i mean, as most people if not everyone that's watching this knows that this is severe downturn and -- >> complete collapse. we could have lost the entire economy, there was this massive bank fails and we had to bail them out with trillions of -- trillions and trillions of dollars. >> yes. and president obama comes in in 2009 and his first speech to congress he basically says, we still have hope. we are going to get over this mess that was caused by this reckless lending in housing and we are going to do this by in part having everyone go to college and everyone -- he literally asked everyone, i think it's your duty to spend a year in college. he didn't say 4-year college or grad school but he did ask every american to spend one year in higher education. and he set this bold goal.
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it was like, you know, we've lost the global lead in having the most educated workforce. we used to have that in the early 90's. we want to regain this lead by 2020 because other countries like south korea had surpassed us in the measure. he was kind of like lbj, lbj was worried about soviet union and barack obama south korea and other countries that were getting more educated workers. he said, let's expand the number of people who are going to college and grad school. and he recognized that there were some problems with student loans. i think an interesting chapter because it's kind of tough but it's also -- i try to maintain and he recognized a lot of problems with student lending and he had a lot of ideas to fix the problems but he did really buy into this notion that college is this great investment that everyone should take part
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in. and inherently that would require an increase in student loans. getting back to the great recession which lasted through 2009, but even after 2009, unemployment rate, even technically recovering as the economy, the unemployment rate was very high and young people, people in 20's, you know, certain groups were really hit hard by this. and so you had this boom in enrollment which it wasn't mostly obama's -- it wasn't because of what he said, just because the economy was so weakened there weren't jobs available. there were a lot of people who said, okay, now is a good time to go to school. and there was historic increase in college and graduate school enrollments around that time. just millions of people go into school in part because they couldn't find jobs. on top of that, they are being told by the president and everyone else that college is great investment, we need you to go to school. so just as tuition has hit like
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an all-time high, just as college enrollment is surges, more and more people are not only going to school but taking out loans to do so, then they come out, a lot of these people come out in 2010, 2011, 2012 with all of the student debt and they can't find jobs and the jobs they can't find don't require degree and don't pay nearly as much as they thought they would be earning. or a lot of people drop out as you said. and so this looks like the perfect storm and you just had tons and tons of people who were now carrying a lot of debt, couldn't pay it off and really felt like they were lied to or misled by whoever, whether it was their schools, whether it was congress or whoever. that really sort of the biggest part of the student loan crisis. that's when it kind of started. it was building and that's when it happened. >> well, also the public perception of it as a crisis,
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right, because you had waves of people before, you had veterans, you had homeless people, you had people who tried and failed and succeed in higher ed and now public consciousness and if we can bring it up to the present day a little bit, we had occupied wall street, we talked about the student debt as political issue, it was a political issue, surprisingly popular in the 2016 and 2020 democratic presidential campaigns. and then the pandemic hit and the pandemic unlike last recession has not led to increase in college enrollment. >> in part because college is where a lot of people meet live and meet and it hit the industries and the institutions that large people gather in so, yes, there was not -- there was actually a drop in enrollment and the other thing congress and the trump administration and the biden administration decided to
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suspend everyone's payments or most people's payments that have student loans and so what's interesting is just to take a step back for a second when barack obama came into office, they passed the stimulus package and part of that was giving people pell grant, increasing pell grant and -- and expanding or increasing access to loans or ensuring that there was continued access to loans which was in part designed to simulate spending and the economy to help the economy recovered. this time around instead of giving people access to lender, congress said we would suspend the payments and so for the past year and a half through september, students would not have been making any payments in the student loans. the policies have shifted. the idea that anyone is on any -- anyone from either party from either major party is, you know, except for bernie sanders is on board with debt cancellation has
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been a huge shift. i've even talked to -- i -- i quoted a republican in my book in the senate who also recognizes that there are a lot of issues, big trump supporter. even he said like when i was interviewing him, he sounded a lot like bernie sanders in terms of like describing the system that he thought fundamentally broken and he said it's morally wrong to put so much debt on young people with them not knowing what they're getting into and so it was really interesting to talk to a republican that sounded a lot like democratic side of things in terms of describing certain system. i think there's incentives among the parties that their -- the system has problems. the politics have shifted. >> let's talk about the policy
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recommendations that you do have in the book and i want to ask about a couple that you do not recommend. >> so i wanted to highlight the trade-off of any potential fix and i think ultimately what i tried to point out is that if schools have more skin in the game. i know that's such a cliché at this point but if they share some of the risks, the history shows that probably going to be less likely to award student loans to students that have no ability to repay them or at least the award be amount of money that they are in student loans, they have no ability to repay them. and so some type of system that would require more risks from schools would -- history shows likely reduce the amount of money that students are defaulting on. one of the things that -- i think there's a growing
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consensus among the parties about whether congress should loosen bankruptcy law and so this is something that has been talked about a lot going back to the obama administration but hasn't exactly happened but if you have, you know, students like the before rowers that i have profiled, you know, she clearly owed an amount that was far higher than her ability to repay it, she only made like $75,000 as a psychologist but she owed $120,000. and so if you -- expanding bankruptcy protection to students is a very high threshold right now to declare bankruptcy but if you expand that, you know, you would -- you would in one sense be preventing a lot of people from spending years and years under repayments that they'll never be able to repay. and then the rest are basically it's just one to have things that i try to argue is congress just needs to clarify what its goals are and society needs to
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clear what its goals are and giving everyone access to school regardless of the price, that's the current system. if your goal to reduce inequality and give the needier students the opportunity to, you know, increase their skills and go to college and increase earnings potential, then that would probably look like something where you're increasing funding for the colleges that enroll them but more likely to enroll them like public community college. so a lot of this just has to do with clarity of what the goals are and then i think that will point to some policy solutions from there. >> it's really interesting because, you know, i do a lot of work now in k12 and there's a mirror image of the debate, i think, because in k12 we have a 90% public system, publicly funded and free to students and then there's a small group of people that say, students should
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carry the money with them and they should have the programs and be able to attend. and the consensus i would say in the public education here is public money is best spent expanding access and quality for all students by strengthening the system that we have and not allowing students to take the money wherever they want to go because honestly, this gets to why education is not really a product. first of all, like you buy that liquor, you take it home, you taste it, you don't like it, fine, you don't buy it the next time. that's not how it is with college. it's hard to make another choice. number 1, number 2, consumers of education by definition don't have all of the information about the quality of the thing that they're going to get. it's kind of a black box. and in fact, it's co-created by the students the value of their own education, right. so how are we ever going to have a fully competitive marketplace that drivers down cost. >> there's a lot more information that is starting to
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be posted online. >> yeah. >> great story on mastery programs at ivy league institutions and it showed that, you know, while masters degrees on average lead to really high-paying jobs, a lot of them don't. so for the first time, there's now data available to show that, you know, if you go to this masters film degree program at this ivy league institution you're going to owe 160 to $180,000 if you're the typical graduate but you're only going to earn 30 to $40,000 year out and you really want to get into that much debt. i do think that there's more transparency. kind of hard to think that we are just now starting to see that information but it is starting to come on mine and i do think that there has been a public shift. there was a public opinion poll that said a couple of back that
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asked the question, do you think college is worth it. and it wasn't saying do you think college is good, do you think it's needed, do you think it's worth it at current prices, is it worth it and there was a big shift of people saying no compared to how they answered that question four years earlier. and so i do think that this notion that you have to go to college at any price is starting to -- a lot of people are starting to question that. it's kind of sad but it's also, i think, could have some positive outcomes of people really start to rethink whether it makes sense to get $100,000 or whatever for the school that they're going to in debt. >> well, it's not the only option on the table. like you also talk about the idea of having free community college and basically changing our k12 system to k14 system in recognition of the fact that in society people need more
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specialized training. is that something that you think dove tails this call? >> the thing about free community college that i wanted to make the point of and this was something that i really started to question early on in 2012. after the mortgage crisis there was this huge public discussion about whether it was moral and unethical to -- for banks to be giving loans to families that they had no hope of repaying. and basically you had like all of these, you had a lot of loans going to people that weren't able to repay them based on their income or based on the value of the house that they were using the loan to buy and there was the same discussion with payday lending and yet, and so there was this consensus news organizations, the way we covered it and within congress, the way it was discussed and debated that what banks were doing back then was really bad
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and it was like -- the government does that every single day. you know, and whether it's giving loans -- and i will just talk about some of the people that i profiled in my book. there's -- there was a student who went to howard and his great grandmother who never went to college and was poor signed up for parent loan to go to howard university which is a great school. but she was not going to -- in all likelihood she was not going to able to pay that back. she ended up dying but in all likelihood she wouldn't have paid it back. same thing at the community college level. i just -- one of the questions that always stuck out of my mind. if it's bad to give loans to homeowners that are just destined to fail and have negative consequences ever, well, why give loans to community colleges at such a high likelihood of dropping out?
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>> right. so -- >> yeah. >> and like education is public good and it's something that everybody has essentially not a constitutional right but potentially actually a human right, a universal human right if we go by the un to access education to the level that they're capable of taking advantage of. and so i would hope that you would agree, for example, and one example is that if you have a disability, the state has to pay for you to go to high school all the way through the age of 21 because you're allowed the 3 years to be able to take advantage of free education. so when we talk about making community college free and accessible to everyone, even students that start up on the 8 ball and perhaps need those extra years to remediate and to catch up because of their circumstances, is that really about -- it's not about taking -- you wouldn't bet on that i canned. you're not taking a kid that you
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expect to pay off but we as a society provide this to our citizens because we believe that everybody gets the chance to gain enough education to be able to work and support themselves and also to understand their own health care and to be able to vote and be an informed citizen. >> yeah, no. and i wasn't disagreeing with any of that. i think that a lot of that i sort of support and argue in my book. the point that i'm making is that i don't think a lot of people realize right now that there are a lot of people going to take college -- a lot of community college students that go in and borrow 5 or $10,000, they drop out and then that debt hangs over their head for years and years. i mean, i have a relative who owes 20 and $30,000 because he went to a public community college. the point that i was making is that our system awards debt to people that are very high
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likelihood of dropping out which seems to be counter to what the policies are in housing and so i just try to point that out. i don't think a lot of people realize that and so my point is, if you -- to have any discussion about how to fix problems, you really have to be aware of the nature of the problem and i think a lot of people think of student debt -- i hear multiple things. a lot of people say, wait a minute, the average student debt is $30,000. most people do get a job and so like why are you writing about this, why are you calling this crisis and then you have other people who say, oh, well, student debt, people who went to harvard and princeton and whining and complaining and why should we worry about that? one of the things that i argue in the book, affects 43 million
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people and it's really hard to talk about what the average student is and what the typical student is. i think there are individual problems that add to a big problem and so, again, when we talk about free community college, i think there's two things that any member of congress or policy member or whoever needs to be aware of and one is that our current policy is giving money to a lot of community college students that are defaulting. most defaults by the technical term are people who owe less than $10,000 and these are the dropouts that you're referring to. and so if you want to prevent students from -- if you want to continue to provide access to higher education but you don't want to have a default crisis, then one of the possible alternatives out there is to have free community college. now those aren't your goals, then you're probably going to have another fix or another set of fixes, but my point is to sort of clarify, you know, first clarify what your goal is and if
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it's to eradicate inequality and give people who really didn't get a good k through 12 experience, to get an education, then, you know, it doesn't seem kind of odd that we are saying you're at such high risk but we want to help you and here is $10,000 that we know that you're going to default on. >> right. >> did that clarify what information referring to? >> yeah, i guess it does. i think we are at the end of our time. this has been a really awesome exploration and complicated ideas. >> yeah. >> so e encourage people to check out joshua's book and writing in wall street journal and it's been a lot of fun,
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josh. >> thank you so much. >> after words is available as a podcast. to listen, visit c-span.org/podcast or search c-span after words on your podcast app and watch this and all previous after words interviews at booktv.org. just click the after words button near the top of the page. >> weekends on c-span2 are an intellectual feast. every saturday american history tv documents america's stories and on sunday book tv brings you the latest in nonfiction books and authors. funding for c-span2 comes from these television companies and more including comcast. >> you think this is just a community center, no, it's way more than that. >> comcast is partnering with a thousand community services to create wi-fi so students with low-income families can get the tools they need to be ready for
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anything. ♪ ♪ >> here is a look at some of the best-selling nonfiction books according to harvard bookstore in cambridge, massachusetts. topping the list is michelle's memoir followed by amanda montel's examination of language in creating and maintaining cults in latest book cultish and after that in 4,000 weeks oliver provides guide to time and time management. .. ..

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