No More Band-Aids

The fact that over forty five million Americans are in one point eight a collective one point eight trillion dollars worth of debt. You've heard from progressives asking for debt relief. You've heard the Biden administration once again hit pause on paybacks on student loans right, and on student loan interests

in the wake of COVID nineteen. But this is something that once again in a couple of months back in May, will they hit pause again because what seems to be happening is a consistency in kicking the can down the road instead of dealing with the student loan debt crisis. You should not, right, we should not be in debt in order to get an education, which as one of my guests. We have two today, but one of them.

First up, doctor Elizabeth Tandy Scharmer, who is the author of Indentured Students How government guaranteeing loans left generations drowning in college debt. How. Doctor Scharmer will talk about the ways in which essentially this has looked like entrapment for low income students, students of color, and women. When we look at the demographic breakdown of who those over forty five million are, it is those students, right, So what

is this administration doing? Coming behind doctor Shermer will be doctor John Oberg, who you may have heard of. He is a whistleblower from the Department of Education and a political scientist who recognize that the lenders were cheating. We're cheating students looking for loans, right, We're cheating the Department of Education in terms of the amount of money that

they were going to be giving back to them. The Department of Education was complicit in what the lenders were doing and then decided to turn the money that they supposedly owed, right, that the lenders owed to the Department of Education into additional loans to place the burden on students as opposed to the lenders. And what doctor John Oberg will tell us is that the Department of Education

is and was complicit in this action. Right, So, not only are we kicking student loan relieved student debt down the road, but we're also continuing the vicious cycle of turning these students, as doctor Shermer says, into indentured servants. Right, So what is this administration going to do and what are the ideas that both doctor Shermer and doctor Orberg will offer to us as ways out of this crisis, folks?

That is coming up next, folks. I am very excited to welcome to wok F Daily for the very first time doctor Elizabeth Tandy Shermer, who is the author of Indentured Students How government guaranteed loans left generations drowning in college debt. And by generations, we're talking about forty five

million Americans. Over forty five million Americans are affected by the student loan debt crisis, which many have referred to as being predatory, as it is women and people of color who are the ones that are most disadvantaged by this loan system and therefore caught in this And I love that I love the title of your book, caught in this indentured servitude once they finished school. So Dr Shermer, let's just start off with, you know, tell us big picture.

How did we get here? How did we get into a space where one point eight trilliant trillion dollars of student loan debt is just hanging over the heads of over forty five million Americans. It's a story of the worst of intentions. And I know because the classic story is like the best of intentions and was just so well thought and as only recently, but actually we've been having a problem with college affordability for more than a century.

And I think the real issue is that when I say the worst of intentions, it was policymakers refusing to actually invest in the public goods and public needs that we need, like colleges and universities which provide the research that we need for vaccines, also the social science research about how to for example, roll them out, and then also help fund the humanities which kept us sane and gave us the critical reading and thinking skills to understand how to get out of this crisis. And we need

an educated citizenry. We need that. But what we're going to do is instead of actually investing in these institutions, stop them from competing for tuition revenue, do own or revenue all these other kinds of things. We are going to create a really terrible financial product, because let's just think this true. I am going to give you a loan for something that I can't repossess and sell to

someone else. That's what a terrible idea. And even if I could, you could never then and actually compete for the job in order to get the money to ever pay me back. And by the way, you're only collateral for being forgetting this loan is being admitted to a college university that needs your tuition revenue. So what a shitty idea. And it was actually modeled on one of the most on a very now infamous federal program, the federal mortgage program, which we now know has disproportionately widened

racial and gender wealth gaps, period full stop. And that's exactly what they did in the sixties. I know what

we'll do. Let's use that federal mortgage program and will model it for something it is nothing like a mortgage, a student loan, you know, one of the things that just deeply troubles me right about about this entire system, and it and you know, and it is it is criminal to me, right, it's criminal to tell people, especially those that are low income, that in order for you to succeed in this capitalist, you know, factory that we have created, that you need to go to college. Right.

I can remember from when I was in elementary school, that was beat into everyone's head, right in my you know, middle income suburban school district. Go to college, Go to college, Go to college. No one ever talked about what the burden was going to be after you left college. No one ever talked about the fact that, you know, folks weren't retiring at the rates that they were retiring at that you were. Your first job at a college in many places wasn't even going to cover right, the loan

that you took out. But we made it impossible right for you to continue on with just a high school education and a majority of places, so we made it like a necessity to go to college, but didn't create a system that would allow people to do that without tying a noose around their necks. You're totally right, and it is this faith that you know, what, if you just go to college, you'll be able to compete for

the well paying work. That was the whole idea of social ability, never actually tackling the problems within the labor market. The reason that women for reason that women and people of color have a harder time dealing with this is one the financial aid officers. Despite what y'all might have heard about affirmative action, they don't tend to get. They don't tend to get the financial aid to stop them

from borrowing. More importantly, when they're actually out on the labor market, they are still paid pennies on the dollar two white men, period, full stop. And then in the case of women, women women are the ones who are more likely to be constantly moving in and out of the labor market to provide unpaid care and to pause those loans. This is what's unique about this moratorium period

right now, when you pause those loans. Sorry for the language, The fucking interest is still accruing for women who are doing the care that we need them to do for both elderly librelats for children, and we're going to penalize them by having more, by just indebting them further. And I have to say, I'm so glad that you appreciated the title indentured students because I got it. I got used to get a lot of pushback from it, but I always pointed out, but that's how people talk about it, Yeah,

talk about being indentured. And when we realize the racial and gender aspects built into this program from the beginning, why are we not saying that? Why are we not talking about that and really listening to the folks who are feeling the biggest burdens. Because it is a factor of race and a factor of gender, period, you know.

And the reason why we don't talk about it is for those very two reasons, right, Because it is a factor of gender, and it's a factor of race, and that we like to pretend in this country that those things are accidental, right, like, oh, that you know that they are not purposefully paving the road to hell for those particular communities who are unable to come out of pocket right to pay four tuitions that are fifty sixty thousand dollars a year, right because we also then we've

created an entire predatory system, so one for people who cannot afford those fifty sixty thousand dollars price tags for university. Then we created a for profit model, right, a predatory college where you can go and get your certificate for a quarter of that, but then that certificate is not real, right,

Like no one's accepting it. Right. It's like it's like a series of Trump universities that we've created because we've created a system that doesn't allow people to really access right the educations that they need without all of these strings being attached. Absolutely, And the one thing I'm going to say here is that I think for me, and this is it's again my brilliant friend kat Ramirez, he

teaches at University California, Santa Cruz. She has always said, is that we in higher education, in the nonprofit sectors are feeling what is happening in the K through twelve schools. We are being demanded to do more with less, and so yet I am getting right now in the middle

of a whip shop pivot to going virtual. But to do that responsibly, to actually connect with people, to make it accessible and meaningful, means completely overhauling everything to actually meet the reality of students where they are, where the majority of students are working more than part time. It's bullshit to think that twenty five hours a week is part times. That's more than forty hours a week. And that's the reality of it. And so we are setting

both up these basic public goods. We have turned them into private luxuries. And then those that are not the wealthy ones that can actually provide it, we are actually then damning them for not providing more with less. Why is it, why is it that so many college universities now have to have food banks. They are on the front lines of a food housing insecurity because we have so disinvested in the basic needs of the people of this country, all of the people of this country. I

had no idea. Tell me more about these food banks and why schools have to have them. I have not heard this. This is new stop. It's food and housing insecurity, period, full stop. And so I am sure that this is still correct that University of California campus is each one has a food bank. Here in the city of Chicago, there is a I believe what they're doing now with the city colleges is a food truck coming in for a food bank. It's not a food truck is like

you know millennials having tacos. It is literally a pantry, a food pantry, a mobile one coming to these city colleges because on the front lines are these college universities because so many people I'm thinking about what you said about what you were told about you have to go to college. You have to go to college. So many people are trying because it's so tied to getting a good job. But then there's so much inequality in this

country that is worsening, just exacerbated by the pandemic. And if you're trying to do better and your first avenue college, then we're meeting. Colleges are meeting at the front lines the food and housing in security. At George Mason University m a university near where I grew up, they have many students. That is where my master's degree is from. Oh that's amazing Nova. Yeah, so I'm familiar. Yeah, but no, but we that is it is it is a it is a it is a it is a serious issue

that we're seeing actually across the country. And this is the incredible work of UM Temple's Hope Center, which did the first big UM study to show that a third of American college and university students, and this, by the way, is pre pandemic, UM had food and housing insecurity, had basic food and housing insecurity. And I think that that's what we really need to talk about, is that we're meeting not just young people, but people going back at

different points in their lives. In fact, I just got an email from a person who's returning after twelve years UM trying to restart her graduate program that this is UM college universities, just like K through twelve schools, are on the front lines in the case. If you're in the city of Chicago, your listeners might know what we're having a big standoff right now about going back safely.

But even before that, CPS schools were actually open during the pandemic, not for construction, but actually I would walk by them. There's a couple in my neighborhood to deliver meals. So we have decided to put schools on the front lines of dealing with food and security. I'm an educator. I don't have the training to do that, and I have tried to educate myself on the issue and learn

about the resources available. But we're asking colleges, universities K through twelve schools to do more with less and to be on the front lines of crisises. Before we even had this pandemic. Let me switch gears for a moment to talk about this current administration and what it was that they said that they were going to do with regard to the student loan debt crisis. And what we have seen right by of the pandemic is the can

being kicked down the road. We'll just continue to pause, right, We'll continue to press pause, but we won't try and actually stop or fix the problem um with you know you, we'll pause you paying back. But like you said, the interest is still occurring. It's still the interest right now is not accruing the interest is That's what that is, what's really important right now it's happening. Is this is historic because they they they hit pause on the interest

as well, for sure. But and that's that not everyone qualifies for that. That's the thing. There's there's some federal loans that don't qualify for this pause, and then the private loans don't. So, I mean, my my feeling is, you know why if this is a bipartisan issue, and let me just pretend right now that we have an actual two party system, Let's just pretend that Republicans care um knowing that they don't. But there have been bipartisan solutions that have been put together right to deal with

this crisis, and yet nothing has happened. My feeling, because I'm a cynic but also a realist, is the fact that, oh, it's because of who it's affecting, the same reason why we wanted to open up, you know, the economies of various states at the height of the first wave of the pandemic because it was only people of color and women that were that were being affected. It wasn't anybody else. So you know, go with God, why is this stuck?

Why are we stuck here knowing that this is a major major problem and that is going to have legs that affect all all industries right, all areas of our lives. Well, so the first thing is, like, I do actually think the people empower many of them do not have to borrow. If seventy of students now need to borrow and families

need to borrow, there is that top thirty percent. And I think from my perspective of someone who's trying to get this book published, it was interesting to me that a lot of the publishers they didn't ever have to borrow, right, And so that's who's at the helm, it's a pipeline thing. But then once I got into, once I got into the folks who are actually helping me with like actually getting the book ready to the editors and things like that,

they all had to borrow. And I think it's a really interesting thing about who the gatekeepers at the top actually are. But I think the other thing I think that's really important is that I completely agree with you. What's really I always talked about this the Indentured Students book, which is everyone wanted a book about a bunch of big, bad bankers. Well, actually, the banking industry actually initially fought

the federal loan program. They didn't want it. They didn't want besides the fact that it's a terrible investment, they didn't want more expansion of federal power. And it was a bipartisan doubling down on creative financing as opposed to investing in the American people in the nineteen sixties. We're just going to give them another financial product. We didn't give them housing the thirties. We're going to give them a financial product we didn't give that. We actually didn't

give them schooling in the sixties. We're going to give

them a financial product to creatively pay for it. And I think for me is that when you actually look at it is we are dealing with a twenty first century democracy with real ideas about you know, majority rule and things like that, based on an eighteenth century constitution that has been so supported and so to me, to be honest, if I could only have one thing, like I had a magical ferry, and I could have one thing, I would actually start to get to because the student

deck crisis is just an example of many crisises of Americans having to pay out a pocket for basic goods. I would start with voting rights. And I mean, actually beyond what's going on right now and they're fighting about in the House and the Senate, I would why is it that we only have four hundred and thirty five representatives in Congress that was set in the late twenties. You know, the country is lot bigger right now. It's

just a lot bigger right now. We do not have real representation, real representation dealing with this the undemocratic aspects baked into a constitution written more than two hundred years ago. We are a twenty first century democracy that isn't good

enough anymore. And if we want to start with this crisis and everything else that's intertwined with it, like a healthcare crisis, all these things, it's got to start actually with having a really functioning democracy, you know, everything to in everything needs to start with the foundation of a functional and actually representative democracy, right, which, if we are honest with ourselves, to your point, we've actually never had, right, Yeah,

particular and you know, particularly somebody like myself who is at the intersection of multiple marginalized communities, as a black woman, as a queer woman, you know, as a as a child of immigrants, Like there is just there. There has

never been equity in that way. But we also have to be honest about the fact that it was set up like that, right, Like it is it is succeeding in who it was choosing to keep out, right, because you need in order to have a functional pitalist society, somebody needs to be on the bottom, right, Like that's that's how you want to talk about, like the actual pyramid scheme, like it's capitalism, right, and who is on the bottom and who and why you need to stay

there in order to aid those at the top. Please go ahead, And what I had to be what I like, what I think is really important to remember when we talk about the origins of all this, the real origins of the Guaranteed Student Loan program hidden and seemingly hidden in that like mid nineteen sixties a celebrated Higher Education Act. It's called the Guaranteed Student Loan Program. But the guarantee was not for the students that they not that they

would get admitted, not that they would actually finish. The guarantee was not for the schools if they would actually be able to expand and meet public demand and new expectations for all their many uses. The guarantee was that bankers would be repaid on one of the worst financial products you could ever come with. That's what it always comes down to, and that was built into that was modeled off of the guarantee in the thirties for housing.

The guarantee for the federal mortgage program was bankers would be repaid for giving out mortgages. And by the way, we're going to construct this entire program to make it extremely hard for people of color and women to actually get a mortgage. There we go. I mean, you know, I gotta tell you, and I say this all the time on woke AF It's like the more that I know, the angry or I become, and if you know me, then you know that there is really just no bottom to my rage. But it is so what pisses me

off the most is that these dots are not connected. Right. What pisses me off the most is that we continue to look for band aid fixes for systemic problems that were created on purpose. Right, And I yes, and I also think too, Yes, I'm tired of band aids. You're absolutely right. That's where I was like, you want to go for the juggler, Let's go to voting. Let's go

to voting and do that. But then also I think we have to look at the language because they're pretty freaking honestness, the guarantee student loan porker, I mean, it was tricky who actually is getting as guaranteed? But I also the one I don't like right now is the public sector loan forgiveness. No one need has done anything that needs to be forgiven. No person in this country who has student debt needs to be forgiven for the debt that they incurred for the education that we need

them to have. As a twenty first century democracy right, not just for our workforce, but just to actually, you know, keep going. And then also they don't need any forgiveness for trying to do that for themselves. And I think one of the things that I think is a real tragedy is that we've made it so much about the cost of this, how you're going to pay that back. We don't actually give those who cannot easily afford to go to college, and that's the majority of Americans now.

We haven't give them the chance to actually go to college and explore what they might be interested in. We've

just made it about the paycheck. And it's just such so corrosive, because is there any wonder why we are losing our arts and humanities right now because we've put such a massive price tech and it just keeps the arts and humanities the purview of a white, wealthy elite period, you know, and particularly particularly at a time when you know it's it's it's always a student of history, right, You're going back in time and you're thinking about these

these moments in our civilization where things got incredibly dark, right, and then what comes out, right, it is art is beauty is questioning, right, so that we are not consistently

moving through these cycles. And it is not lost on me that those are the first things to go right, because we don't want I think that what we need to recognize as this nation is that we don't want an educated citizenury because if you look at our K through twelve curriculum, if you look at the way that you have to buy into a higher education, right, we

don't want that. Because if we actually wanted our citizens to be educated, then we would educate them in a way that functions with the now, not you know what was we wouldn't still be operating on an agrarian system in our K through twelve. We would have adapted, like you know, year round school. We would have expansive curriculum that isn't you know, electives as like stem or electives as art. It would be baked in to our society

and we would listen to those experts. But the reality is is that capitalism thrives on the lack of knowledge. We need cogs in a machine in order for that to function. Right, Yes, I completely agree with you, and especially since for me, I mean I when I some folks in the education departments, by an inscription department, I've actually read my book and we were talking about it and I was like, you know, we have to think

about how incredibly complex these financial products are. And one of the things that I do when I teach the US History Survey, the first thing I do is I ask my students, hey, do you live in a union of states or a nation of people? And they all first day or like nation of people? It's like, really, show me, show me your id. Oh is it a state? Ide? Are you actually registered to vote it a state? Not actually as a US citizen. And then I show them how I'm actually to show them how to teach this.

How you teach the class as I showed them a pay stub and I was like, so, tell me on first day, what are all these deductions? What is this social security thing? Whendn't that get pass Why did that get passed? And in most classes they might know it's something there's money for old people, but they have no idea about all the other kinds of things. So it's like, well, this is citizenship on the page, but these are if you look at that pay stub, that's just a bunch

of taxes and financial products. Because on your pay stub is probably deductions from your employer if you're lucky to have it for your healthcare and all this other kind of stuff, and thinking about your your point about like robbing us of these basic rights which for some reason are still high to where we're working in the labor market in this country as opposed to just the fact

that we are here being, you know, contributing. The thing is I end the class by showing them the ten ninety nine that independent contractors get and there's no deductions, there's nothing on that for their basic rights and needs because we're so still back there that you have to work for your worth as opposed to recognizing the worth of all of us. Is it any wonder that this again is disproportionately leaving a lack of citizenship for those who don't have the hardest time getting good work that

is steadily disappearing. What is the fix, doctor ship No, No, no. And I say that knowing that the problem is so complex because it was created to be right that if you were to actually pull the thread, then the whole

thing would fall apart. But I think that there are some things that have been highlighted throughout the pandemic over the last two years, which is remote learning right has affected a lot of universities where people are just like, so why am I paying this high bill when I could be online and probably getting you know, a similar edge, like why why am I paying for my kid? Or them taking out strapping themselves with loans when you could

go to state school? Right if we're not going to go back, and like there are there are all of these things that I think we're highlighted. So I just want to hear from you, well I do so for me, my thought is that, like, so I will say that I think the future is hybrid, and so as a historian, I'll tell you, like, you know, no one can predict the future. But what we do know is that moments of crisis tend to accelerate. Was already happening. There wasn't

you know, dabbling in just doing completely online. But that's a lot of the predatory for profits. But hybrid where I now actually record my lectures and so when I'm actually in the classroom with students, I'm spending it doing much more interactive connections with them. It's a better learning environment for them. There's no reason for me to just

lecture at a bunch of students. I use other kinds of hybrid technologies as well, so to actually have a more meaningful experience for what we're going to do online and what we're going to do when we're lucky enough to be able to come in person. It tends to have better outcomes. The second thing, though, is but actually in terms of what and I love what you brought about the state schools, state schools are also pretty unaffordable

right now too. And if again, if that now you're letting me have a ferry that is going to give me whatever I want. So FIRSTUS voting rights versus voting rights real expansive ideas about voting rights. The second is actually having genuinely tuition free public options all freaking four years. And I think that that's really important, and that's the

College for All Act and what that would do. And this I hesitate to say this because it does reach back to an American tradition of having what we call the public competitor. That's actually how we got affordable utilities was having the Tennessee Valley Authority. It actually had this

public competitor for cheap electricity. It actually had also good jobs with it, better jobs with it, and then it just created this pressure across the country to lower the rates of the utilities and literally started turning lights on in rural communities and urban communities in nineteen thirties. Huge difference. But that was what was supposed to be a part of Obamacare. We were supposed to have that public option, to have that public competitor to work in there to

police that. Now, obviously, in the case of healthcare better, it would be to actually have healthcare, not health insurance. That's the other big thing I tell my Soud's like, have you noticed this, It's actually just insurance that's a financial product. It's actually not care. I just want you to know that. But I think that having genuinely robustly funded,

tuition free public options would do a lot. Now, the only thing we got with the Biden administration's agenda They're Build Back Better agenda was and it was interesting, it was robustly funded community colleges. So you would have done your first you had the opportunity to your is two years for free, a competitive pressure. It's not perfect, it's not what we should By the way, that was an idea of seventy five years ago, and I was like, Oh you guys, you're just now trying that again. It's

actually one of my favorite reports. It's it's there's a commission report. They're like, we're gonna have we're gonna build community colleges across the country. They're going to be free, and also we're going to make them free and put them in all sorts of different communities to deal with the systemic racial, religious, and gender inequality across the country. Like they like, literally residential report, this is what we're

gonna do with nowhere. Hold your surprise. Smaller fixes that And I hate to see this because you're so right. We don't need a band aid talking understanding that everyone who that essential workers and so many people were shown to be essential during this pandemic. They need to be a part of the debt cancellation programs called public service low and forgiveness. Put them in there. They've proved it.

Governor get Fretchen Whitmore and in Michigan is starting to acknowledge that these folks actually need to be acknowledged and genuinely rewarded for their service. And then another temporary fix is this big fight to get to something really meaningful, a meaningful systemic change, not just to reform, a change

the bankruptcy. Let student debt be discharged during bankruptcy. I mean, I hate to do that because it's giving into it, but if we can just give some relief now and also obviously talking about some really now, there are demands. In the Democratic primaries, we had two candidates who wanted mass cancelation. Again, not forgiveness. No one did anything wrong here, mass cancelation. It does not sound like the Biden administration

is going to do that. But I want to give credit to the many people who are continuing to hammer him, both activists, both education experts, activists, education experts, but also the progressive Democrats and Congress are doing it. To just keep hammering it and keep this issue alive because it really matters. And so there's a bunch of different things trying to get to what really needs to be an overhaul about how we fund this basic public good to

stop it from being a private luxury. Oh, doctor Sherman, I could talk to you forever too, you know, because this this this issue is just so deep and it cuts through so many different things that are fundamentally wrong. Um tell us about the conversation that you are going to be moderating towards the end of this week, and how folks can connect and learn and learn more. It's a it's a very exciting panel that you're that you're going to be by rating. I'm really excited about it too.

So it's the University of Southern California has an institute and we are going to show clips on the next episode of a new documentary that is coming out. It's a six part documentary cult Um Um, and we're going to show clips from that. These are the clips that highlight the whistleblower, John Oberg, who was in the in the Department of Education, blowing the whistle on these predatory practices.

But on the panel as we talk about these issues about what to do now to go when the moratorium likely ends in May, is going to be some amazing activists, the founder of Student Loan Justice Alan and then another incredible actist out of California, Kiomi. And then we also have two education experts Berkeley Law who's been at the forefront of actually talking about the student loan law and

that's Jonathan. And then we have Mitchell Stevens up at Stanford about the Pathways Lab I'll be on there too, and I think it's going to be a really great event and your audience can find out more all the details we're looking at the past the hopefully they gave you a link that you can put in the show notes and we'll do that. And so that is Thursday at seven. I only know because of Central time, because I can never do the math in my head. I've

lived in so many different times zones. Seven o'clock Central, which I'm nine nine percent sure is five pm Specific time, eight pm Eastern time. Yeah. I really hope all of your viewers will will will zoom into it. And where is the So the documentary, folks is entitled Scared to Debt, which I think is also a very good title, Scared to Debt? Um, where is the docuseries? I believe Um there's I go to the Scared to Debt and they'll

help it different. I think they're a different place. Well, I think I think one of the episodes is on is still online for sure, And it didn't win Okay, the great episode did win some awards for sure. Okay. Awesome, Uh, Doctor Elizabeth Tandy Shermott, thank you so much for making the time to join woka at daily, and I hope that you will come back to talk to us more about an issue that doesn't seem to be going anywhere anytime soon. I would love to thank you so much

for inviting me. I really appreciate it, folks. I am very excited to welcome to okay F for the very first time doctor John Oberg, who's a political scientist and whistleblower at the Department of Education raising the alarms with regard to how different lenders were in fact gouging the Department of Education of funds as it pertains to student

debt and payback of those loans. John, thank you so much for making the time to join woke F. I will say that this is an issue that I think is not covered enough, and I think that when we talk about the student debt crisis, we oftentimes are not putting a human face to it and we're not walking through all of the ways in which forty over forty five million Americans in this country are affected by this debt.

So I want to open up with asking you what made you make the decision to blow the whistle at the Department of Education, What was occurring at that time, yes, happy to answer that question. Before I do, let me say I agree with you entirely that more focus needs to be on a lot of these issues surrounding student loan debt and the amazing amount that has been accumulated. Too few people have asked, how did this happen? Really?

What was behind it? How could we wind up with this situation which has been called a national catastrophe in a wonderful book by Josh Mitchell and a wonderful book by doctor Shermer calling it indentured students. To answer your question about that, about why I decided to become a whistleblower, I was an lay in the Department of Education's Research office.

I had previously been in the Office of Legislation and Congressional Affairs, and I had handled a lot of the legislation between the Department and the Congress as the liaison person. So I was very familiar with the statutes and the

laws and so on. I was curious in two thousand starting in two thousand three, as to what happened with one particular issue that I had been so involved in legislatively, and that was trying to phase out an excessive subsidy that existed for lenders going all the way back to nineteen eighty and the agreement that we reached with the Congress in the nineteen ninety eight reauthorization of the Higher

Education Acts, and oh, that will be phased out. It'll be gone soon because all those old loans will have been paid off. To my amazement, when I started to check it, I found that the amount was growing and that essentially lenders were claiming from taxpayers astounding amounts which I started to project would be in the billions of dollars. And this I thought was inappropriate. It was actually fraudulent.

I brought it to the attention of the Department. I was told, no, you're not supposed to look into that. That's not something that we want any attention to. I brought the situation to the attention of the Inspector General. I went to my office office of Ethics at the Department and said, may I do analysis on my own if the department won't let me do it, and bring my work to the attention of the General Accounting Office.

The Government Accountability Office is called now and so soon got involved and cut off part of the part part of the excess subsidies. So we capped at it probably close to a billion dollars and I retired from the Department of Education. But then Margaret Spellings, the secretary, said, oh, yes, that was illegal, but we're not going to ask for

any of the money back. Why at that time, I said no, I'm in a position then under the law in order to file a suit so called keytam that is a whistleblower suit against on behalf of the United States, in order to recover the funds. I spent an eleven years trying to recover the funds, and we had quite a bit of success against several of the lenders. Why were why was the response from the secretary that they were not going to try and get funds that were

rightly there's back? Why why would the reaction be just leave it alone. Well, the answer lies in the fact that the department was complicit. Many people in the department

had come out of the lenders and they wanted the money. Uh. They initially were complicit in setting up the false claims, and they were still very much in power when when the time came to ask for the money back, some of the lenders actually thought they would They were going to have to pay the money back because they didn't think it was legal in the first place, and it

had actually escrowed funds to do so. But Secretary Spellings did not ask, and I think that is part of the part of the part of the question is how did this happen? Is to look at who was in the department at the time, who was calling the shots,

who was making the decisions. We have, of course, from discovery in my lawsuit, many documents that show the emails both internally in the in the in the lenders who were making these false claims, and between them as to how they were doing it, why they were doing it. And then of course, of course we also have considerable evidence after this became public about how these funds were then turned into loans that should never have been made to students in order to burden We have attorneys attorney

general report in Iowa in two thousand and eight. We have an auditor general in Pennsylvania in two thousand and seven who said the lender there had lost sight of its mission. We have cases in Kentucky, we have all over the country, and it's important, I think, to be able somehow to draw a straight line from these illegal claims and so on to the current crisis that we

have in the country. So essentially, the loss that the Department of Education and I put that in quotations, the loss meaning the money that the lenders then took, they decided to create new loans to essentially put place that burden of recouping of those lost funds on potential students. Am I hearing that right? Yes, they used they used the excess funds. For example in Iowa, there they had claimed approximately fifty eight million illegally. That was determined to

have been an illegal claim. And then along comes the the Attorney General of Iowa a few years later and is able to say, look at what Iowa Student Loan has been doing. It has been loading Iowa students up

with debt that they really shouldn't have. And that's an important that's an important line to draw, I think between the illegal the complicity of the Department of Education in allowing the lenders to do this, not getting the money back, the money then being used inappropriately in order to increase the debt burden of the borrowers. So, John, here we are where we have an administration that campaigned on essentially

relieving this debt for over forty five million Americans. One point eight I believe one point eight trillion dollars in debt is held by over forty five million America has. And you know, we are watching because of the COVID nineteen cross crisis, some pause that is happening in payback. But isn't that essentially just kicking the can down the road? What do you see this administration doing or that is

going to tackle this outsized crisis. Well that's a terribly good question, and a lot of people are are pondering exactly what should happen. And you framed it, You framed it correctly. These pauses are kicking the can down the road. They are, however, very valuable because a lot of people are just not in the position right now to resume repayment, and it I think it would be unconscionable to try to force them into repayment, and at least the Biden

administration twice, I believe his as delayed that. As to what else they are going to do, let me give some credit, and I hope it's a harbinger of what they're going to do, because they have done some good things. They have come in and straightened out some of the messes that were left from decades past, not just the previous administration, but many, many previous problems. The so called borrower defense issue. They did a good, pretty good job

on that. On permanent disability students and so on, and veterans and so on. They came in and straightened that out and aggressively tried to get to cancelation for those totally and permanently disabled that had a legal right to loan cancelation. The Biden administration came in and looked at the Public Service Loan Forgiveness program, which it had been run into the ground totally by a lender and servicer that was one of the defendants in my lawsuits, so

I knew all about it. They should never have gotten the contract. But the Biden administration came in and used authority under the so called Heroes Act going back to almost two decades in order to straighten that out. So those are indicators that this administration can do the right thing. The big question now is what is the appropriate response to the whole to the whole shebang, the big picture at one point eight trillion. They did pretty well on these others, and I would like to see them be

aggressive in addressing this. I have been among those who has looked at the secretary's authority in order to address some very significant broad cancelation. It's called the Compromise and Settlement Provision of the law, and I have seen it used. I've been in the room when it has been used over the decades. I know the history of that particularly, and I have a broad interpretation of that. There is

a general Counsel Officer. General Counsel is given an opinion to the Secretary and to the White House about the powers of the Secretary to cancel loan short of anything else from Congress. However, that has been redacted, so the public doesn't know what's in there. I think that's probably what is in there is a secretary has a lot

of authority. The one thing that no one seems to be talking about very much, if at all, and why to discuss it with you is I think not only does the Secretary have the power under this provision, but the Secretary has an obligation to act in order to square things up with many borrowers who have been misled through no fault of their own because of the complicity of the Department of education itself in driving up this debt. A lot of borrowers are in trouble. They are in default,

they're behind on their payments. It's astounding to people when they learn that many borrowers have actually paid off principle and interest and more, but they still have a huge debt in front of them. Why is that, Well, there are fees, and there are penalties, and there's a crude interest, and there's capitalized interest in the exists, and there's that, and many of the borrowers never had the chance to say,

I didn't sign up for that. The service the servicer has led me astray with bad information as to what my choices were, as to how to get out of default, as to how to get out of trouble if I lost my job. There's and there's plenty of evidence to show that the servicing has been terrible. I believe the Secretary has an obligation, because of the Complicity Department and the lack of supervision of the of the servicers, to take some bold action under the Compromise and Settlement provision

of the law. What would it look like? Can you can you paint a picture for us, John? What would it look like if the Secretary, believing that they have the authority, if they were to wipe out right as people are saying, wipe out the one point eight trillion dollars worth a debt, what does that look like? What beens? What happens to lenders, what happens to the department, what

happens to those with the loans. Well, there are several proposals out there, and as I say, I am in favor of doing something bolder rather than weaker on this. There is, of course the idea of just canceling at all. There is the idea that's been advanced by several people of doing fifty thousand. There's the idea of doing ten thousand that was advanced as a campaign issue by President

Biden himself. There many of these have run into some criticism because of equity issues, or this is a wrong approach. There ought to be another one, and I'm not familiar with all of them, but there have been some rather inventive alternatives that have been discussed, one of which has intrigued me. Some think tank has come up with the idea of a retroactive pell grant. If pell grants had been what they were supposed to and had been applied to a student's loan package in the first place, they

wouldn't have had to borrow so much. And if you were to go back in and apply the pel eligibility to the outstanding debt. Now I don't have the numbers, but I think that would that would be a targeted approach. People couldn't criticize the approach on that, and it might do an awful lot for a lot of borrowers who are struggling because they were low income in the first place.

Right Another thing that I have thrown out, and some people have said, well, yes, that's a good idea, would be for everybody who is still in debt who has paid principal plus the cost of money, cancel those debts. That would I don't know exactly how many people would be affected by that, but it would be a very

significant number. And it would also help the department right now because you have two of these servicers who are going out of business simply because they are so fraught with problems that they no longer can comply with the government requirements on it, and millions of accounts have to be moved from those servicers to other servicers. Unfortunately, there is not a long line along other servicers who may be doing who may be able to do a good job on that. And so it's quite it's quite a

logistical undertaking. If a lot of loans could be canceled right now so they didn't have to be transferred, that would be in the interest of everybody. That would be an interest of taxpayers, of the Department of Education, of the borrowers, of of the servicers who might be overwhelmed. So that's another kind of an alternative. I don't have all the alternatives at at my disposal. All I can say is I believe it's an obligation of the Secretary of Education to take bold action in order to address

the crisis. Um, John, you know what troubles me to is the constant conversation that we have in this country right about the shrinking middle class, about low income folks, about those that we deemed, you know, in twenty twenty as essential workers, right, and then others that were able to stay within the confines of their homes, uh and and and work right. And what I what I look at this debt crisis. I think of the ways that people are locked into jobs and careers that they don't want.

How do you think just for the just for the sheer ability to be able to offer a couple one hundred dollars a month to pay off this debt that was supposed to give them greater opportunity and privilege right in our in our society, how do you think that this debt, like this, this shackle really does go to affect our society and affect our economy. I know that you're not an economist, but like I do want your

thoughts on that. Well. I think some good demographic analyzes would shed a lot of light on the situation you just described. Yes, a lot of people have been shackled to jobs they don't really want because of student loan debt. Some of those might be the lucky ones. Some people have actually been burdened with debt without any college completion and credential that helped them get a job to start with,

and so they may be in dire trouble. We also should look at the demographics of this as to who who really makes up this one point eight trillion dollars and is there I did analysis back in two thousand and three and published a working paper that showed that we were really disadvantaging in the way we put student loan packages together the low income and particularly the black

low income. So I think that a lot of work has to be done, and I would hope that that work is being done right now, to look at all the categories of people who are in trouble, to look at the obligation of the secretary to address them, because a lot of this has been known for a long time and there should be numbers on them, and somehow

Taylor the response to those demographics. Yeah, you know, John, I just want to say, and I'm certain that you've probably received this so many times over, but thank you so much for your outspokenness right to offer the truth at a time when that is something that is waning. To say that people are being squeezed out of the very little that they have, and what are we doing about that? Why are we why is the department being

complicit in that? And then out of one instance, talking about creating a robust middle class when they are actually complicit in the ways in which people stay trapped in a low incommon in poverty because of debt. So I really appreciate the work that you continue to do on this crisis. Can you offer folks, You're going to be on a panel with our guests that we also had on doctor Shermer that is going to be looking at the documentary Scared to Debt. That is that is happening

five pm? What is at five pm Pacific time? Can you tell us a little bit more about this panel and why it's important. Yes, I'm eager to be on this panel because I'm a big admirer of Professor Shermer's book about student loans and how we got into trouble on this. We're going to have a panel that looks at Mike Comoin's film Scared to Debt, and I believe this is the second installment, a second chapter of his film. We saw the first part of it and now we're

going to see the second part of it. And if I understand correctly, it is entitled The Whistleblower and it focuses on me. I will be interested in seeing what it is. But then we will have a panel moderated by Professor Schrmer, and it has some other people on it. I'm very eager to hear their views. I will, of course say some of the same things that I have just shared with you that I believe the Department is complicit. I believe the Secretary has an obligation under the law.

It doesn't make just good economic sense, but I think there is an obligation there to act. And I would say also that, yes, some people have commended me, but you also have to understand and that from my standpoint, I was a federal civil servant. I was under oath in order to execute the laws of the United States properly.

I didn't see that I had any option, especially since I was the one who uncovered the manipulations of laws loans among bond estates, and no one else had standing to do it, And so if I hadn't stepped up, I don't know how I would have lived with myself. It was simply an obligation I had, and I think that's the way a lot of people who are whistleblowers feel about their actions. They were just doing their job. Well.

I appreciate it because too few people actually do their job in looking out for other people other than themselves, So we appreciate that. Thank you so much for taking the time to join woke f Daily today. Appreciate you and good luck on the panel. Okay, thank you anytime. That is it for me to day on woke F daily as always. Power to the people and to all the people. Power, get woke and stay woke as fuck.