[music]

Tanzina Vega: I'm Tanzina Vega. Welcome back to The Takeaway. More than 40 million people in the United States still owe money on their student loans for a whopping total of more than $1.6 trillion.

President-elect Biden has supported legislation to forgive at least $10,000 of student loan debt, which is less than what some were hoping for, but that's not all that president-elect Biden has planned. Ron Lieber is your money columnist for the New York Times and the author of the forthcoming book, The Price You Pay for College. Ron, so great to have you.

Ron Lieber: Hello, Tanzina. Who holds all of this trillions dollars of debt?

Tanzina: Well, one way to think about this is to break it down according to whether it is people with higher incomes and more ability to pay or lower incomes and less ability to pay. Then also to think about whether this is debt from graduate school or whether this is debt from undergraduate or from people who did not complete at all.

One of the things we do know is that there is more money owed by people who do have the ability to pay and have gone to graduate school. It's slightly disproportionate towards the people who have a little bit more money.

Tanzina: Now, what of Americans who are unable to pay for their student loans been doing in the meantime?

Ron: The other thing we should think about in terms of what the statistics and the data tell us is that the people with lower incomes and lower balances, oddly, are more likely to be in default. They're more likely to be in trouble. There's all sorts of people with under $10,000 or even $5,000 in debt who are not in repayment for a variety of reasons.

Now, one of the things that's happening, both for them, if they are aware of it and for other people, is that they've been able to pause their student loan payments without interest accruing since March and the Biden administration has made it clear that they are going to extend that sometime beyond the current deadline of January 31st.

Tanzina: Of course, I'm going to assume that tuition has been on the increase in the past couple of years in the United States, that hasn't gone down. Has that affected people who are considering going to college, Ron?

Ron: Well, there's a couple of ways to think about this. There is the list price, the rack rate, the retail rate, and that sure looks like it's going to the moon, but the net price that people pay after discounts after financial aid of various sorts, that too has been going up on an inflation-adjusted basis, but not as much as many people may think. It's been going up more at the state schools where state legislatures have sort of disinvested in terms of the subsidies they provide to those schools.

Tanzina: Now, how much do we know? I mean, this is a loaded question. We've got about a minute and a half to go, but having big unpaid student loan debt can actually affect you long-term, right?

Ron: It can. A number of economists have tried to examine what's happening everywhere from small business formation to the ability and the willingness, which may be two different things, to do things like purchase a home or even have a child or delay having a child.

Here's the thing about this, Tanzina. We are conducting an enormous national experiment that is now decades old using teenagers as Guinea pigs to see what happens when we load them up with debt, instead of subsidizing their degrees to the extent that we used to a generation ago. It is going to be awhile until we understand exactly what the implications are of that, but we are certainly going to find out.

Tanzina: Ron, we talked a little bit about it, but what is Biden saying he's going to do in terms of student loan forgiveness after COVID-19.

Ron: It's interesting that you use the word forgiveness, some advocates refer to it as a cancellation. I try to be neutral or switch off with my terms, but forgiveness almost implies that people have done something wrong which they need to be forgiven for. Cancellation just means we do something to help people who may have been wronged themselves.

There is a conversation around terms in terms of the policy questions. What Biden is signaling at this point is that he's going to ask Congress to make a decision about what they want to do as opposed to signing an executive order that would wipe away a bunch of debt in one fell swoop. There are a lot of political implications here above and beyond the policy ones.

Tanzina: Of course, we know that as we were all waiting to see who would take control of Congress, we know that the Democrats right now have a very slim majority. Is there a chance that these plans will be approved given that political backdrop?

Ron: I would not dare to predict the political environment or stick my finger in the wind right now.

Tanzina: These days I hear you.

Ron: There are some things we know about what's happened in the not too distant past. I think part of the reason that the Biden administration is concerned about the use of executive orders as opposed to congressional acts is they remember what happened in 2009 when a CNBC correspondent named Rick Santelli went on air live from one of the trading floors in Chicago and started sounding off about subsidizing losers' mortgages, and rewarding people who carry the water instead of drink the water during the housing crisis.

The concern is that there will be another Santelli like moment. What would be different this time is that the winners, the people who would be big beneficiaries in student loan forgiveness or cancellation is the middle-class and above. The argument would be, well, we're sticking it to the uneducated again, these people who never went to college in the first place, they're getting the shaft because this isn't for them, even though it's not really true if you think about it proportionately.

Lower-income people who have student loan debt forgiven, who are themselves, disproportionately people of color, by the way, it will be a higher proportion of their income, and it'll have a disproportionate impact on their lives even if it's only $10,000 that gets waved away.

Tanzina: A lot of Americans would appreciate any relief at this point. Ron, you've been covering this for quite some time. You have a book coming out about it. We're about a minute and a half left in the segment. What is there-- Is there one thing that you and your expert opinion would need to happen to really improve the student debt crisis in this country?

Ron: Well, I think that the people-- I'm not about to blame borrowers themselves for doing what their colleges tell them to do and what our country tells them to do, which is to try to better themselves, but there is a part of me that sort of feels like Smokey the Bear as a college counselor. Like only you can prevent student loan problems.

Here's how, don't borrow money for an institution where students tend not to complete their degrees because the worst-case scenario is that you don't finish for whatever reason and you still have the debt. Then there are schools where it's clear that parents need to borrow all sorts of money just to pay the bill. You want to avoid those two if you're undergraduate.

If you're going to graduate school, think hard about industries that may not be stable, and have a high likelihood of making you unhappy. Maybe you don't want to go into six figures of debt just to take a flyer on one of those industries, or certainly the more expensive institutions in those industries.

Tanzina: Good advice there, Ron. Ron Lieber is your money columnist for the New York Times and the author of the forthcoming book. The Price You Pay for College. Ron, thanks so much.

Ron: Thank you.

[music]

Crayford: Hi, I'm Crayford from Sioux City, Iowa. I currently owe $16,000 in student loans from being in school over 17 years ago. I'd love the president-elect to keep his campaign promise and help us eliminate this debt that hangs over our heads. I've made my payments and then slowly erodes, but, come on, 17 years is a long time.

Female 1: I have about $10,000 in student loan debt, and I've been able to manage exactly zero of it during COVID because every dollar that I have has been going towards just cost of living. I actually had my entire tax refund taken in February before the crisis started because of my student loan. I was able to take a chunk out of it that way, but what I would like to see out of Biden is I would love for him to just forgive these darn things because I was already a disadvantaged student.

I'm the only one in my family who even graduated from college. I would love if we have free college education altogether because one of the reasons I am a first-generation college student is because no way in heck can anybody in my family as impoverished as they are, afford a college education and get out of our situation. If we just had free public universities I feel like especially marginalized populations would benefit from that tremendously.

Adam: Hi, this is Adam from San Diego, California. I owe in excess of $35,000 in private student loans. I've been working from home during the pandemic, so I've basically been able to continue paying as normal.

I would hope that President Biden would seriously consider student loan forgiveness or other options, but I think we also need to have a larger conversation about access to education in the US. How much education is required and also the rising costs of education, not just loans and grants and how to pay for them.

Tim: Hello, this is Tim in Jacksonville, Florida. I have had much debt student loan debt and my wife the same. We're trying to get two kids through college without much student loan debt because we knew what a burden was on us. I believe that the pool of student loan relief money should be paid out to those careers and those people doing the most essential work in our society, so mental health professionals, social workers, teachers.

Andrew: My name is Andrew from Gastonia. I graduated in 2017. I have about $25,000 in student loan debt. During COVID, I've been able to continue working the whole time so those payments have gone to my savings, and then last month, I was able to buy a car that I really needed.

I would like to see the Biden administration forgive all student loans, but I think a more realistic compromise could be matching what people have already paid towards their student loans and changing all the interest rates to 1% or as low as possible.

[music]

Copyright © 2021 New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.