The craziest thing that has been happening to me this week that is really making me feel like Demi Moore and Ghosts is that my phone keeps ringing, but the calls are coming from me. I get calls like that at least three times a day. Listen. I was waiting to get something delivered at my house and I missed my delivery when I missed everything because I'm always getting spam fixed, you know, And so I said, Okay, we'll try to be better. I'll answer and see who it is.
And I can because people would say, oh, I tried calling you, but I didn't get an answer. If I don't have your number, say, I don't know who it is, and I'm not going to answer because last week I answered and I said hello, and the person was like, do you have diabetes? I'm selling something strips or monitors. I don't know what they were saying, but lately it's
been me. So it makes my contact pop up and it's like, you have a call from Zakia and I'm like, no, no, So what you're not gonna do is bring this bad juju through my phone. Maybe it's future. It's a kid calling to tell you like don't eat all that kale. No future me would definitely send something that I could
verify future me, but not call future in me. Send like a letter or an email, something that I could show like, look it happened, tuchus, A kid I trust would send like some type of code word to let me know it really is Yes. Currents Akida would do that too. Current a Kia does do that. I'm like, hey, this is how you know it's really me and I'm my girl, I know it's you. I'm looking at you. I'm TT and I'm Zakiyah and from Spotify Studios. This
is dope laps. So whether it's spam or robo calling or calls from your future self, there's a lot of calls you don't want to answer these days. And I think one of the things that I always see on the internet people saying they don't answer calls because of Sally May. Right, Sally may have been knocking on everybody's door since what feels like the beginning of time, and everybody is bobbing and weave in to duck those phone calls because you'll get your money. When you get your money, Sally,
you can't even stay in touch with your family. You got long lost relatives trying to reach you. You like, can't risk it. I don't have a minial. This could be Sally. I can't make the payment this month. So today we're talking about debt, specifically college debts. That's right, it's been the elephant in the room and it's time to address it. Let's talk to that elephant. And I know y'all might be saying the hell a TT is the key at talking about this is not science, But
let me tell you, yes it is. Yes it is. You thought that you could put dope labs into a box, No you can't. You're not just talking about physics, chemistry, biology, We're talking about everything because all these things are science, and there's a scientific method that can be applied to all these things. Economics is a social science, right, It's the science of money, the flow of money, and it has great effects on society as a whole, on each and every one of us. No one is excluded from
the economy. Yep. So this science is actually something that all of you all can benefit from. The fact that so many people are identifying with this and there's memes everywhere I turn about it. It feels like a major problem. I mean, cause it's like, you go to school and you're just trying to make your life better, right, because that's what they tell us is that you got to go to school, you got to get these degrees in
order to have a better life. And then as soon as you're done, they're like, Okay, now start paying me back. It's like, whoa, whoa, whoa. I got to establish myself first. How am I supposed to establish myself if you keep if you taking the money out of my pocket as soon as I put it in there, It's like somebody training you to walk, and then they're like, I'm about to chase you. They don't even give you. They don't even give you a head start, right, at least give
me a head start, right. Oh, these entry positions not paying like that for real? It's like, can I get a savings and then we could talk about me paying you back? It's crazy, and I know it's really real because it came up from one of our three two hundred and thirty seven Democratic candidates, from Elizabeth Warren. Yeah, she talked about eliminating student loans for people who have what was it fifty thousand? She was saying she would. I think it was eliminate fifty thousand dollars of student
loan debt if you make less than one hundred thousand. Okay, I said, I'll see you trying to build up the middle class. As soon as everybody said that, they're like Elizabeth Warren for president. But everybody's jumping on the bandwagon. But occasionally there was a lot of backlash too. There was, and so then I was like, but wait, that sounds
good to me. So now I'm starting to think I don't know enough, and there's so many other things that are going on with the student loan process that I am not privy to that could mean that this whole eliminating student debt is a bad thing. I don't see how it could be a bad thing. I know a lot of people that are crushed by student debt. But I do think there are things I want to know. It's time for the recitation. I think first we want to know do most people have student loans? And like,
we know what a student loan is. I guess, yeah, how does it work? And how's it different from other standard loans? Right? What's so different about it that so many people are defaulting on their student loans. Why does it take so long to pay back? The struggle is real with paying them back and then what happens if you can't pay? And is everyone borrowing equally? My other question is what was up with that stuff that Elizabeth Warren was saying, Like she introduced something about in her
platform about student loan forgiveness. I want to know more about that. Yeah, student loan forgiveness, is it real? Like is it? This is a trick, isn't it? And what would that look like? So now we want to lay the foundation right, what's the history of student loans? The first student loans were given out to students at Harvard back in like eighteen forty or so. That is a
long time ago, Yeah, and only to Harvard's students. But since then we've gone through various iterations of things that are like a student loan or a grant like the GI Bill, the Federal Family Education loans, the Peil grant which you didn't have to pay back. But then we kind of did away with a law of that stuff by twenty ten, and then by twenty twelve, the amount of student loan debt that we have in the United States it got up to one trillion dollars. That's tr
tr million illy on. We also know there's another problem, right aside from overwhelming student debt, the cost of education is so drastically different. I'm tired of baby boomer saying I went to college. You paid three thousand dollars for all four years exactly. That's completely different from what we paying these days. Those are the fees for a semester. Okay, I'm not trying to hear it. Yeah, I feel like baby boomers were going to college for like a nickel
and a bag of chips. College is way more expensive now. In twenty seventeen to twenty eighteen, the average cost of attendance was over forty thousand dollars for an out of state public school. But even for in state public education that's twenty five thousand dollars. And private schools they cost over fifty thousand dollars just for one year. So now we're talking about let's say you stick to this grip, you take all those classes, maybe some summer courses too.
Four years at a private school two hundred thousand dollars, you bought a house, You get about a lot of things. So I have questions about that. So to find out the answer to some of these questions, we turn to our good friend, Colleen Campbell.
My name is Colleen Campbell, and I'm the director for post Secondary Education at the Center for American Progress Action Fund. I do research and advocacy on student debt.
And for the purposes of today's lab we're going to focus mainly on federal student loans, which make up the majority of the student loan pie. Some people do choose to take out loans from private institutions, but those are harder to get in a lot less flexible. Okay, so let's just rip off the band aid. I want to know what the current state of the federal student loan debt is today. How bad is it?
So there's about one point five trillion dollars outstanding of federal student loan debt. That's about forty three million people who have student loans, so it's about a fifth of adults. For context, it's pretty comparable to auto debt. Actually, so there's about one point one trillion outstanding in auto loans.
But the number of adults in the US who have a car loan that's more than double the number of adults who have student loan debt. Yeah, about forty four percent of American adults are paying off car loans compared to twenty percent of adults who are paying off student loans. So that's more debt but fewer people. That's not a good look. So who are these people that are taking on this combined one point five trillion dollars in debt.
Before we dive into the policy and economics around student loans, let's kind of survey the landscape of higher ed in the United States. So let's start with who's going to college in the first place.
Most college students are adults, they're over twenty four, they're married, they have children. Most people are not enrolling in a public four year college or a private four year college. And you better be damn sure that most people are not getting.
A graduate degree. This is so important to hear, right, because the image of a college student in the media is this bright eyed, bushy tail, button up polo shirt, pop collar, boat shoes, lay your pot in the ear, right, But really it is all the cost, no vineyard vines, vineyard vines. But it's really like a mom who's nursing her newborn and reading introduction to sociology and trying to make sure that the spaghetti don't burn.
One of the things with student debt that I think, really I like to do this level setting before we dig into these issues, is to frame for people that we are very much biased by the people around us and our own experiences.
All Right, so it's time to talk to the woman in the mirror. Our understanding of student loans is probably based on our own experiences and the experiences of our friends and the people that we know. Yeah, people in our bubble. But in order to really understand the whole complicated mess that's associated with student loans, you really have to burst that bubble.
If most of the people you know have degrees, you actually are like your bubble is relatively small, especially if you only know people with graduate degrees. Yeah, twelve percent of adults have graduate degrees.
And Colleen says that the number of people without a high school diploma is almost equal to the number of people with a graduate degree. That's crazy. This really helps put our bubbles in perspective. Right, how many people do you know without a high school diploma versus people with a graduate degree. The chances are that you know more in one group or the other.
So we really have to think through kind of like what the landscape of the American population looks like, particularly when we break these things down by race, so that we can have a better understanding of who we're going to be affecting and like where we might want to be prioritizing those dollars.
We'll get to that later in the show, but first let's start off with the basics of student loans. How do they actually work.
When people take out a loan, that's what we call their principal balance, and then there's an interest rate attached to that loan. Right now, for undergraduates, interest rates are between usually about three and a half percent, like five or six percent.
There are also subsidized and unsubsidized loans. With subsidized loans, while you're in school, your loan won't accrue interests. So if you borrow three thousand dollars in your first year of college and you graduate four you years later, your DEA's three thousand dollars. Unsubsidized loans begin accruing interests right away.
So in this way, your balance will increase over time and is.
Actually shockingly easy to get a loan and that's how I was designed. Federal student loans were created for anyone who wanted to pursue higher education. Yeah, did you know you don't even have to have a credit check to get a federal loan. You got to get a credit check to get like a washing machine. These days, if I want to open a five hundred dollars store car, that's a credit check. But if I want to take out ten thousand dollars in loans at age eighteen, no problem nothing.
There is kind of this tenant of federal law that says we should loans are an entitlement. We should give loans to anybody who wants to borrow a loan to enroll in higher education. And that's kind of like a great thing about student loans, right, Like I would not have been able to go to the college I went to without student debt. I was able to take on student debt, and I'm very successful now, like I'm a success story of student loans. But for a lot of people that is not the case.
Right people are drowning in debt and unable to pay their loans back. It's a mess out there. Student loan reform has become a major part of a lot of the presidential candidates platforms. Yeah, the presidential candidates for twenty twenty are popping up, and a lot of the conversation has shifted to student loans and student loan debt. But
why are student loans becoming a problem for so many people? Well, I mean, I feel like there are many reasons why the current system isn't working, and one of them is that some colleges haven't been playing fair.
A lot of schools have really taken advantage of these programs and taken advantage of students. So if you think of things like for profit colleges that have been like predatory trying to get people to enroll so that they can make all, you know, tons and tons of money off of these students and not offer them a high quality education, then really those are the people who are in really bad shape.
That's kind of like how UNO's trying to change the rules, how they're saying that you can't put a draw to on top of a draw four, because that's exactly what the government is doing, right, And I absolutely draw six. You need to draw six cards. I think student loans are worth to fly and is like draw eight loans like draw eight and also never buy a house, You'll
never be able to afford it. Another reason is that a lot of people who take out loans to go to college don't end up finishing, making it more difficult for them to find a job that allow them to pay off their student debt.
Typically, what we end up seeing is that people will enroll in either for profit colleges or community colleges, be enrolled for a semester or a year, and just be like, I can't do this. Life is getting in the way. I'm taking care of children, I'm taking care of my family. I need to work. And they drop out of school and then they have these smaller loan balances and they just can't repay them.
And for some people, it's like they're running on a treadmill, right. So even though they're making monthly payments, their interest rate is too high for them to make a dint in their overall loan a miilt, and even if they make a dent, those interest rates just pop those dents back out. Yep.
There are instances where people go into what's called negative amortization, which basically means that their balance is increasing even though they're making pays on that debt.
And so then what happens when you can't pay. When you can't pay, you run the risk of defaulting on your loans, which can have really serious consequences. Yeah, if you have default on the loan, that's a ding on your credit score. But also defaulting on your student loan means that the government might try to get that money in other ways. So they might take your tax return,
or they might garnish your wages. So they're going to be going into your check that you're getting from your job and saying, I'll take a little bit of that, thank you, that's mine. Did you know they can even sue your employer? Oh my gosh. Of the forty three million people currently struggling with student loan debt, nine million are in default. But they're not who you think.
And so what we actually end up seeing is that the people who default on their federal student loans are people largely who didn't finish college, and they have much much lower balances than the people who are actually paying down their loans.
So when Colleen says much lower balances, she means like less than ten thousand dollars. That is crazy, Yeah, because you would think that people default on their loans. There are people that have li seven hundred and fifty thousand dollars in student loan debt right and they just can't sustain those payments.
You'll hear news stories about people has like six figures in debt and like, how are they paying it? We actually have options to help those people, and those people tend to use those options a whole lot more than people who are taking on smaller amounts of debt, dropping out of school and then defaulting on their debt.
When we come back from the break, we're going to talk about how people are paying off their debts and who's benefiting from the current programs in place and who's not. We're back, So in the first half of the show we really focused on the ins and outs of student loan debt. How much is there, how does it work, you know all that stuff. Now we want to turn to diagnosing the problem. And one thing I'm really curious
about is how long has this been a problem. It definitely feels like the amount of overall student loan debt has exploded recently. Is that true?
What we've seen is really a big jump in indebtedness over the last decade In particular. So when we think about the recession that happened, what typically happens during recessions is lots of people in roll in college. What that also means if we're not investing grant aid, is a lot of indebtedness.
And when you're in a recession, you don't have a lot of money and there's not a lot of jobs available, so you go to college and you take on some debt. At the same time, the price tag for college education has also gone up, and programs like the pilgrimt they don't cover as much as they.
Used to As time has gone on, what people, basically legislators have said is we're going to instead put all of our kind of eggs in the student loan basket.
So student loans used to be a tool just for the middle class and upper middle income people, but now it's a tool for college access for everyone.
And we're seeing that it's having real disperate affects, particularly for borrowers of color.
So even though it feels like the expansion of student loan debt would make college more accessible to everyone, is not that simple, right. It's a little more smoke and mirrors than it might initially see. So what's actually happening. So imagine we have this pot of money that's focused on people with high financial need. It covers seventy five percent of their expenses and they don't have to pay it back after college. That's the pail grant. Then legislators decided, nah,
we won't spend so much money on the pelgrant program. Instead, we'll encourage student loans for everyone. Now more people can go to college. But there's an unintended or maybe intended who knows side effect of this. Now you have people with great financial need using a pel grant, But now since legislators have disinvested, the pil grant will only cover about thirty percent of their expenses and they're taking student
loans for the other seventy percent of their costs. And remember, student loans, unlike peil grants, have to be paid back. So when people say, oh, my granddad went to college on the pel grant in nineteen sixty five, yeah, brah, that pel grant cover most of his costs. You didn't have to pay a bet. So my cousin who went to public institution is drowning in student loans and entering into a much more competitive job market and earning less with her college degree and paying back way more coins
than your granddad could ever see how that works. With all these people in debt, there are a bunch of government assistance programs set up to help with repayment. Right. There's income based repayment, where a portion of your income is exempt before you start paying off your loan. There's also a program called Public Service Loan Forgiveness for people who work at nonprofits, where the remainder of their debt
is forgiven after ten years. And then there are specialized forgiveness programs for specific careers like teachers, nurses, and people in the military. But with nine million people defaulting on loans that are under ten thousand dollars, something isn't working. Yeah, what's keeping those folks from getting the help that they need.
So there's a little bit of a mix, right, So, some people leave school not knowing that they have student loan debt. Some students also believe that if they don't finish their education that they aren't going to oh the loan back, which is not true. But again it's kind of there's an information gap going on.
Another barrier is that you can go a really long period of time without paying your loans. So unlike with a private loan, you can just let a federal loan sit up to a year actually, and if there aren't any consequences for that long period of time, it just gets easier and easier to get complacent about paying off your loans, and then all of a sudden, here comes the government knocking at your dough. Well, why are people
waiting until the government is knocking on your door? Like, why aren't people taking advantage of some of the programs that are available.
These plans can be really administratively difficult to get into because you got to call your loan service you're up, You got to do a form online, you have to verify with the IRS what your income is. It's kind of a pain in the butt, right, But also the other thing with income driven repayment, you got to certify your income every single year.
Every year until you're done paying your loan off. I don't remember to do anything. I would totally forget that. There was one time I walked out of my apartment with no shoes on and got in the car and started driving and then almost made it to work with no shoes on. You can't ask me to do things like that. Every year, I will not remember where's Steve Jobs.
If my iPad can talk to my Apple Watch, that can talk to my computer, and my Apple Watch can unlock my laptop, and truly, we can figure out a better system for the IRS to talk to the Department of Education. So it's pretty obvious at this point that the policies and programs that we currently have in place aren't for everybody. In fact, sometimes instead of helping like the programs designed to do, it's actually damaging for people.
So naturally, the people who are most affected by this are the people who are borrowing more not more money, but more often. Colleen says, we see stark differences in borrowing rates by race.
For white students, it's about fifty four percent of them borrow. Black students about seventy one percent of them borrow Latin next students it's about forty four percent, and Asian students it's about thirty percent.
From all that you should know is that the outlier of all of these groups are African Americans. Seventy one percent of them are getting student loans. That's twenty percentage points higher than the average student. That's significant.
So What we have also seen is that default rates are higher for people of color, particularly African Americans, and even African Americans with bachelor's degrees are much more likely to default on their loans than white folks.
That's just the tip of the iceberg, right, because if you look below the water, there's something. There's another elephant in the room that we're not talking about. There's another polar bear hanging on to the iceberg, okay, and that's pay inequality and wage discrimination. And when you put those things in on top of trying to pay a student loan.
It becomes even more difficult because people of color end up having higher borrowing rates. Overall, they are being disproportionately hampered by their student loan dead And so we really need to think through equity focused policies that are not compounding things like labor market discrimination and wage discrimination and putting people in a worse off position than they are from the get go.
So Colleen says, we need to refocus the policies to help students in the most need, not necessarily the students with the most debt, because often the people who have the most debt also have the highest income. They're going to undergrad grad school to getting a doctorate. Their doctor is doctorate, and they're the ones benefiting the most from these debt relief programs that are currently in place.
So this is where like some criticism of Elizabeth Warren's plan has come in.
Remember, Elizabeth Warren's plan would forgive up to fifty thousand dollars a student debt for families that make up to one hundred thousand dollars, and then there's even some form of relief for families who earn up to two hundred and fifty thousand dollars. That's a lot of money in my book, So you know, you.
Could be still be getting forty thousand dollars of loan forgiveness if you're making one hundred and fifty two hundred thousand dollars.
I follow a lot of people on higher education on Twitter, and the Internet was rumbling. Okay, Hire was saying like, oh no, this is impossible. I had to pay stodo loans. Other people should have to pay student loans, and that is backwards, do me.
There are lots of folks in kind of like the DC policy space who have been frustrated that we are going to be spending a lot of money on people who have good salaries or making a good amount of money. Then you have other people coming at this from well, people shouldn't be taking on debt for college in the
first place. This should never have been a thing. And so you know, and to make this politically feasible, we need to offer something to high income people, because we'll only give something to low income people if we give it to high income people.
Let me tell you the high income people got the gift is the high income I am so glad we did this episode. We learned so much about student debt and the current situation with higher ed I mean, I'm just happy that student loans now that I know, is one point by trillion dollars where we need to talk about it. We need to talk. So I'm glad it's on the table, absolutely, and I'm hoping that a lot
more of the candidates will respond to that. And her talking about it in this way is forcing all of them to talk about it, which is another reason why I think it was a good thing for her to put out because now all of the other candidates have to include that in their platform because she's going to talk about it, so they have to talk about it, and this is something that is affecting all of us. Even if you didn't take out a student loan, it
is affecting you because it's affecting our economy. Yeah, and while that proposal may not be perfect, is getting the ball rolling right because the one thing that this has really hit home for me is that students are making these decisions at age seventeen, eighteen, twenty two, twenty five. And it is like one of those story books where
it's like, turn page twenty two for this adventure. And if you accidentally take the wrong combination of student loans, or you don't pay something really early, you turn to page forty and you missing an miss you drowning a debt, you drown it, and you swimming in the sally Made River with cement feet. Okay, and so now what how do you recover from that? And it's a lot for somebody to recover from what you're so young and just
trying to make it in this life. We know that education is the catalyst for the American dream basically right, and access to education is so important, but how you access that education can derail or propel your life by leaps and bounds and it's so early on and it touches so many. It's bigger than it's it's deeper than rap is bigger than just college loan debt is equity
in hiring, pay housing? Right is it extends to So if you're saddled with student loan debt, what does that mean for your credit and your ability to buy a house, or your ability to buy a car, your ability to pick up and move and even get some jobs. Some they run your credit and if you have a lot of debt or you're not making those payments, you will
be blocked out of certain jobs, in certain positions. I didn't even know that now's the time to really look and say, like, are we saying that we value education and are we saying that this is something that increases quality of life? And if it is, why are we making the barriers so high to obtain it? Exactly? It's like,
who are you trying to keep out with that barrier? Yeah, So, as the conversation starts to ramp up around student loans, the student loan forgiveness, we really want to ask Colleen, what are some things we should be considering.
I think that having conversations with friends who are progressive. That really trying to get people to understand that just because it benefits them doesn't mean it's progressive, and that they need to do a lot more thinking about like what this country looks like as a whole and getting a much better sense of, like, you know, the fact that their experience is not other people's experience.
That's it for Lab seven. Don't forget to check out our website for a cheat sheet and the show notes from today's episode. You can find that and sign up for our newsletter at Dope Labs podcast dot com. And we had a really long conversation with Colleen, and there's a lot of stuff that we just didn't have time
to put into this episode. So what we're planning on doing is Instagram Live with Colleen where she can answer more of your questions about student loan, student loan debt, repayment, forgiveness, all of that. And so make sure you follow us on Instagram at Dope Labs podcast so that you can know when that's going to be happening, and keep calling. We love hearing from you. What did you think about today's episode? What other questions do you have? Share your
story with us. Our number is two o two five six seven seven zero two eight. You can find Zakiya at Z Said So on Instagram and Twitter, and you can find tt at Doctor Underscore t Sho and if you love the show, don't forget to follow us on Spotify or wherever you listen to podcasts. Special Thanks today our guests Colleen Campbell follow her on Twitter at Colle camp That's co O L L e C. A m p Our producer is Jenny Rattle at MASTS. Mixing in sound design by Hannis Brown, original theme music by Taka
Yasuzawa and Alex Sugiura. Additional music by Elijah Lex Harvey. Dope Labs is brought to you by three M and is a production of Spotify Studios and Mega Own Media Group and is executive produced by us T. T Shidia and Zakiah Wattley. And folks are drowning in debt, and that worries me because I know you can't swim. I'm gonna learn. I'm gonna learn this summer. This summer, it's on, it's in the cards. I'm gonna learn this summer. Somebody needs to throw a life rap. Do we have enough
life raps? This is the governmental life, rap bankruptcy. I don't know, I know, declare bankrupt