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[quiet theme music]
* *
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[patriotic music]
- America...
[crowd chatter]
Land of opportunity...
and a basic promise.
- A nation that rewards the effort and determination
of every single American.
- So the least among us shall have an equal chance
to achieve the greatest things.
- And the doors of higher education will be open to all.
- No matter what your circumstances
or where you are,
you are part of the life of our great nation.
- It's one thing all our presidents agree on,
each in their own unique way.
[patriotic music winds down]
- Have a good life. We will see you soon.
- And to get that good life,
all we had to do was follow the instruction manual
on how to do the right thing...
study hard,
be nice to your brother... - Get him!
- Go to college, graduate,
and voila, achieve the American dream.
But at some point...
[clattering]
- The US economy shrinking.
- They're not getting married. They're not getting homes.
They're not getting jobs.
- We've been looking at 40 years of flat wages.
- Those doors to opportunity got harder to open.
[light laughter]
- This is a big one-- staggering debt
from student loans.
- Today, that old instruction manual
feels like false advertising.
- The system is unfair.
We tell young people to go to college.
They have to take out loans in order to graduate.
And now they're punished for it.
- For doing the right thing,
borrowing money for the right reason--
higher education.
[tense music]
- This is a story about how our basic bargain
was broken by greed and politics.
- There was two lines
slipped in under the dark of night.
- It wasn't until it was all over, you look back
and say, oh, my God, two lines in the bill
changed the lives of millions of Americans.
- And my personal journey to uncover how student debt
crushed the American dream.
- This lending system has now catastrophically failed.
- This thing has just spun out of control.
- I see you've got a whip in your hand.
- This is not a whip. It's a flogger.
- Oh, okay.
And who was secretly behind it.
- We are trying to figure out
where it came from. - Who?
- Nobody put their name on this one.
- Unraveling this political scandal
would require listening...
- Adults tell you, you have to go to college.
- I did what I was supposed to do.
- And it feels like somebody lied to you
somewhere along the way.
- Traveling the country...
- Glad you showed up, man.
- Tremendous focus...
[whimsical chords]
And steely determination.
- It is a problem.
Did Congress even know what it was doing?
- It's keeping me up at night.
- This was a legislatively manufactured crisis.
- This is a scam.
- It's the greatest robbery in modern American life.
[moody, heavy chords]
* *
[punchy music]
- So how did this whole long saga begin?
I worked for years in politics and journalism...
- Here's Blake Zeff.
He's a politics editor at salon.com.
- And BuzzFeed contributor Blake Zeff.
- He's a Washington insider
who's worked for President Obama.
- Blake, what can the president do on guns
to give himself a point in the history books?
- Well, I'll tell you the first thing is...
But behind the confident demeanor
and ill-fitting sport jackets,
I had a secret.
My wife Patty and I were almost $200,000 in debt.
[baby cooing]
What are you doing right now? - I'm going to pay my loans.
I just got notice that they're due.
- That's Patty.
Like all of us,
Patty has made a lot of decisions in life,
and maybe not all of them showed great judgment.
But deciding to become a psychologist
to help veterans with PTSD seemed like a good one.
- With graduate school, I thought,
I'm going to graduate and be a doctor.
I'll get a good job and make a lot of money
and pay those off in no time.
But I didn't understand
that pretty much every penny I earned
was going to be going to my student loans.
I feel like I'm never going to catch up.
- With four separate loans,
our total payment each month was nearly $2,000.
But this isn't just about the numbers.
- The loan companies are certainly evil
and, you know, pull things all the time.
Like, I was getting messages saying
that I was delinquent in a student loan, and I wasn't.
They make it really confusing.
Like, every month, I have to read everything
really thoroughly because I'm always suspicious
that there's going to be some sort of hidden fee.
- This whole system seemed really sketchy.
- I feel like one of the lucky ones
because I'm able to make my payments.
But for some people with busier or harder lives than we have,
it's so much worse.
- Eventually, Patty had to leave the VA hospital
and go into private practice
just so we could keep up with the payments.
- And it'll affect all of our kids, you know?
None of us are saving for our kids' futures.
You know, I thought about like,
maybe it wasn't a great idea to have him.
But I don't know.
Fuck it. He's really cute.
Right?
- And we're lucky.
We have good jobs and so many advantages in life.
- Get some scholarships, kid.
- But what about the 45 million other Americans
with student debt?
The news coverage was not encouraging.
- Student loan debt in this country
is now bigger than credit card debt.
- And what does it do?
It not only hurts these students.
That's our number one concern.
It kills the whole economy.
- They're delaying having kids.
They're delaying getting married.
They're delaying buying houses.
- I think it's a crisis right now
for families and student borrowers.
- It wasn't just the borrowers.
Economists and pundits across the political spectrum
were warning this could have drastic effects
on our economy.
- For that is the student loan bubble.
- Yeah, even him.
- Down to $1.5 trillion and counting.
- Crushing student debt.
- Was there a story here?
To find out, I did what any good journalist would.
I Googled it in the middle of the night.
Every opinion column, every quote in a news story,
all came down to the same one expert,
Alan Collinge--
one of the nation's foremost experts on student debt.
This guy was everywhere...
except an easy-to-visit location.
[light music]
* *
Alan? - Hey, man, watch your step.
- Yes. What is this, an ice storm?
- Pretty much. Welcome to Wisconsin.
North woods. - Thank you very much.
- I hope you like cats.
- Uh...
- They're friendly.
- Oh, yeah, I can smell them.
- You know, I sprayed Lysol, but I don't think it worked.
- So you've basically devoted your life to this problem.
- I'm very sorry to say
that appears to be how it turned out.
It's become a 17-year ordeal,
a journey.
- After accruing hundreds of thousands in student debt,
Alan became obsessed with the issue.
And before it was on the media's radar,
he made raising awareness of it his life's work.
But it turns out, trying to change
an entire financial system can be a lonely fight.
This is your family? - This is my family. Yep.
- Were they aware of the work you were doing?
Your parents? - Yeah.
I like to think my parents instilled in me
the spirit of the happy warrior.
It helps me keep my chin up during some of the low times
during this battle.
- What would you say to this kid
as you look at this younger version of yourself?
- Oh, that's actually my brother, believe it or not.
- Oh, okay. That's you?
- Uh, that's also my brother.
- Alan's devotion to this issue meant giving up a lot.
- When I first started this,
I had a good job in the defense industry.
I had health care. I had a house.
I had many things.
I have none of those things today
because I decided that the most useful thing
that I could be doing with my life
was fighting this battle.
The lenders pull out all the stops
against our best and brightest
for the crime of going to college.
This lending system has now catastrophically failed.
It's galactically failed
by all rational metrics and measures.
We now owe close to $2 trillion
in federal student loan debt.
And you know, it seems like nobody's really even
paying any attention to it, so...
- Whoa. There was definitely a story here.
But was Alan right about its magnitude
and that no one was doing anything about it?
- We're just gonna have to clear this whole area out,
both tires.
- It all seemed so outrageous.
- Glad you showed up, man.
- Sure.
And honestly, so did Alan.
Meet Jerome.
He's the chair of the Federal Reserve,
which is a fancy way of saying
his job is to make sure the economy doesn't suck.
A Republican appointee,
Jerome is not known for his bleeding heart
or stirring oratory.
- We're not on a sustainable fiscal path.
We need to get on one.
- But on student debt,
Jerome has been surprisingly forthcoming.
- In your view, does the high level of student debt
create a drag on the economy?
- As student loan continues to grow
and becomes larger and larger,
then it absolutely could hold back growth.
- That's the key.
It's hard to tell from his Jerome-like delivery,
but "hold back growth"
is literally his nightmare scenario.
- If our college debt were a country,
it would be the eighth wealthiest
country in the world.
- This is Kevin Connell.
After falling into almost $100,000
of student debt of his own, he wrote two books
exposing the corruption of the student debt system,
all by the time he was just 21.
In one word, how would you describe
the student debt system? - Predatory.
- Why?
- Because of the conditioning students face
their entire lives, saying you must go to college
in order to be successful.
People are willing to pay whatever
it takes to go to college.
- And prominent economists agree.
As an economist, the prominent economist that you are...
- Shoot me up good.
[overlapping chatter] - Get it!
The prominent economist that you are,
how big of a problem would you say this is?
- Oh, it's an immoral problem.
We impose this upon our young people.
It's a narrative where we tell them,
go to school, better yourself.
College is the key to your mobility.
But as a young person, 17, 18 years old,
are they making an authentic choice?
- Well, I feel like I've done everything right.
Growing up, you know, I'm being told, go to school, work hard,
you can do whatever you want,
and you can have whatever you want.
And it's kinda like, okay, um...
you know, I'm 31. What happened here?
- I talked to people from different communities
across the country to see how student debt
had affected them.
- Adults would tell you...
you have to go to college.
Like, a college degree would mean
getting a good-paying job.
And then you buy a house and you
live the life that you want.
You know, it seems silly to imagine that now.
- I served eight years in the United States Air Force.
And it's kind of like, I did what I was supposed to do.
I contributed to my country.
And yet, student loans put me in debt
that I thought would be avoided by joining the military.
- They all did what they were supposed to
and thought they were achieving the American dream.
What does the American dream mean to you?
Is that a thing?
- The American dream now
is to have zero dollars, for a lot of people.
I mean, so many people have negative net worth.
- But if you can't reach that American dream
of having zero dollars, don't worry.
The media has your back.
- Almost 1/3 of all college students
are using their student loans to pay
for their spring break trips.
- It's important for them to learn this lesson early on
of personal responsibility.
- Pull yourselves up by your bootstraps.
- These are adults we're talking about.
And they need to realize that when they take out debt
that they are liable to repay that debt.
- Someone might say, listen, you took out a loan.
You pay it back. It's simple.
Like, don't be irresponsible. What do you say to that?
- I think I would have said that totally makes sense
eight years ago when I was 17.
- Let's not forget.
These are kids being told to sign on the dotted line.
No parental consent necessary.
- My 17-year-old self was very unprepared
for all of those details.
- But some in the media say that's no excuse.
- The students knew exactly what they were getting into.
- You knew what you were getting into.
When someone says that, they don't get it.
- Most people don't know what they're
actually signing up for.
There's a whole series of gimmicks played
in the industry that attempt to cloud
what the actual picture looks like.
- The lenders become very creative in how
they can inflate a loan.
- What they do is, they give you the teaser rate to start.
It's artificially low.
- That's right.
College lenders are using the classic
"first one's free" move, used on everything
from streaming services to cocaine--
or so I'm told.
But that's not the only trick up their sleeve.
- It's a lot of fine print. It's overwhelming.
- Maybe you make an underpayment one month,
and they pyramid your fees until you don't notice.
- If you end up defaulting, your wages can be garnished.
They can come in and just say, nope.
We're taking 15% of your wages without any sort
of due process at all.
They do the same thing with Social Security.
- So if you're a teenager signing the papers,
why don't you listen to the adults in the room
who were there to guide you?
Remember your guidance counselor,
how they reeked of coffee and pretended to know your name?
- I truly don't think guidance counselors, my parents,
family, I don't know anyone
that understood the true detriment.
- Okay, Blake, come and bring me that banana.
Stick the banana right in between the foot.
- Like this? - Yes.
Position at the other way.
- Oh. Like this? - Right.
But make sure there's nothing else in the background,
that you just see feet and banana.
- How's that?
The real reason I came to see Marcella?
Her daughter's student debt was so out of control
she was running an active business
creating erotic videos to help pay it off.
- Every day I wake up, the purpose of my day
is to make sure my children have a better life.
With my oldest daughter, I did prepare
for the first four years of college with her.
I started when she was in kindergarten.
I was very young when I had her.
I did not know she was going to go on for her masters.
I wasn't prepared for that.
I did not know she was gonna want to go to law school.
But when she told me about it, I just encouraged her.
Yes, okay, great. What do you need to do?
- What Marcella's daughter needed to do
was take out a $46,000 loan.
- I'm trying to work as hard as I can.
Because then after she finishes,
it's gonna be over $200,000.
- Wait a minute.
Marcella started out with a $46,000 loan
and now it's $200,000?
- Most of my salary is going into paying off
my student loans right now.
But even with that, after four years of residency,
I'm gonna basically be in $50,000 more debt.
- I've talked to people where they say,
I've been paying my student loans for years.
I've been making all my payments.
I've been doing it on time.
And yet, I owe more now than I did at the beginning.
What is that?
- That is the phenomenon of compounding interest.
- Okay, let's stop here for a second,
because compounding interest can be
pretty tricky to understand.
Here's what you need to know.
While most loans make you pay a small amount of interest,
compounding interest charges you interest on interest,
making your balance grow exponentially
and quickly get out of control.
- If I were the only person with student debt,
I may say, you know, gosh, I really messed up here.
But then when it gets to, like, 45 million people,
you're like, okay, maybe this is systemic.
Maybe this isn't just a couple of people
who made bad decisions.
Maybe this is actually an orchestrated scam.
- I'm convinced that the system was rigged
to create the very crisis that we're in today.
- That's when I learned about a piece of this puzzle
that got very little attention but would change everything.
If you could point to one thing about the student debt system,
one thing you would change, what would it be?
- Bankruptcy.
- What do you mean?
- It is for all intents, impossible to discharge
student loans in bankruptcy.
- Wait, I thought that all debts
could be discharged in bankruptcy.
- Except for student loans.
In 1998, they essentially took bankruptcy protections
permanently away for all time from federal student loans.
- Could this be true?
And isn't bankruptcy a bad thing?
I think the first time I heard the word "bankrupt"
was from watching "Wheel of Fortune."
The audience goes, aw, and you lose all your money.
And I just assumed that's something I don't want.
- Well, I've had many clients, post-bankruptcy,
go on to buy houses, which they've never been able to do.
I've had two clients actually become multimillionaires.
- How hard would it be for me to discharge
my student loan debt through bankruptcy?
- It's impossible.
- I guess bankruptcy is reserved only
for the truly neediest cases.
All right, to be fair,
they do deserve a fresh start...
Mostly.
But student borrowers deserve that option too.
Now that doesn't mean everyone's
going to run out and file bankruptcy,
or that they even should.
There's something much bigger at play here.
- In the absence of the threat of bankruptcy,
you open the door for widespread abuse
by the lenders.
- Without bankruptcy as an option,
college lenders now frivolously lend out
as much money as they can to anybody who wants to apply
because repayment is guaranteed.
It's up to the student to pay it back no matter what.
There is no bankruptcy option.
- The lenders know you can't run, you can't hide.
So this essentially gives them a license to steal.
- When lenders have no incentives to restrict
who they're lending to or how much to loan out,
guess what happens to tuition costs?
- The colleges raised their price,
essentially at will.
- And you're paying for it. And college lenders know that.
So the more obscene the tuition,
and the more ridiculous the gimmicks that colleges play,
the richer college lenders become.
- So just having the threat of bankruptcy
forces the lenders to behave rationally
and with a modicum of good faith.
- And without those bankruptcy protections,
we're left with a self-perpetuating
system of greed.
- You know, from the outset,
this was a legislatively manufactured crisis.
- It was the 1998 reauthorization
of the Higher Education Act.
- The Senate will now vote on the adoption
of the conference report accompanying HR-6.
- Mr. Biden, Mr. Bingaman, Mr. Durbin,
Mr. Feingold, Mrs. Feinstein, Mr. Ford...
- Was there, like, an uproar when this happened?
Was this, like, a big headline at the time?
- There was no headline.
In fact, I don't think most congressmen even knew
that it happened until probably weeks, months,
or maybe even years afterwards.
- The bill I will sign in a few moments
will enhance the economic strength of America.
- They did this massive change to the economy
that would affect all these people, and no one noticed?
- It was very sneaky what they did.
It was two lines slipped in, in conference committee
under the dark of night.
- There it is...
the two lines of legal mumbo jumbo
that would alter the economy for multiple generations,
almost entirely.
- Technically, the bankruptcy code
says if it represents an undue hardship,
you can get a discharge.
- Undue hardship? [chuckles]
That shouldn't be too hard to prove.
- Well, the courts have interpreted that saying
that means there's no hope of repaying.
- What do you mean there's supposed to be no hope?
- They have to have such a condition
you'd never want to have to get the student loan discharged.
- What do you mean? What kind of condition?
- Well, they might have serious cancer, physical disabilities.
- So let me understand this.
The way to get rid of student debt
right now is to have cancer? That's probably the best way?
- Well, unfortunately, that would be a help.
- Okay.
Who is responsible for this craziness?
- There's no name that I can find attached to who did it.
Nobody seems to be willing to step up
and take the credit for it.
- Wait, wait, wait.
Nobody put their name to it?
We don't--we don't actually know who did this?
- No.
It's like a whisper in the wind.
I don't know.
- This is something that bears repeating.
According to Alan, everything from ballooning student debt
to spiraling college costs can be traced back
to this one, two-line provision
in a 1998 law.
And no one knows who's responsible for it.
What?
- I would like to know who slipped
these two lines into that bill that
took bankruptcy uniquely away.
I think that is the $2 trillion question.
And I think that person needs to do something to make good.
- We now had a whodunit on our hands
and a mission right in my wheelhouse.
I would find and confront the person responsible
and demand they help me get this disastrous law changed.
That would mean going back to when the fateful provision
was passed.
The year was 1998.
- The Yankees have done it again.
- The Yankees had just won the World Series.
John Glenn had just returned to space...
- NBC's science correspondent...
- And an important scientific breakthrough
was just announced.
- Mike Byerly was one of the more than 4,000 men
who volunteered for the trials of the anti-impotence drug
called Viagra.
He was very satisfied with the results.
- Speaking of tireless stallions
who just won't slow down...
- Steve Kornacki, who has gotten some rest,
is back at the Big Board tonight.
- MSNBC's Steve Kornacki is not just
the master of the Election Night Big Board
or a khaki pants icon.
He's also an expert in '90s politics.
- Good to see you. Cheers. - Hey, any time, Blake.
Maybe he'd have some clues for me.
This--this bill was signed in by Clinton in October of '98.
What's going on in his world at that time?
- So Bill Clinton wanted to get things done in 1998.
I mean, every president wants to get things done.
But Bill Clinton had a particular imperative to
because of impeachment.
The Clinton strategy in 1998 was to say,
this whole thing with Monica Lewinsky was a personal thing.
And what I'm trying to do as president
is the business of the people.
He was doing the business of the American people
as everybody else in the political world
was focused on his personal life.
- Okay. Pretty good headlines, right,
like, "Clinton signs a higher education bill."
it sounds like Clinton just wanted to have
a nice happy press release so he could
change the topic a little bit instead of talking
about the problems he's having.
- Yeah, and I think that the second piece of it
is bipartisan, because it wasn't
just looming impeachment.
The other thing that he was facing
was the midterm election a month later.
And those things were linked. - Right.
- So the idea that a month before the election
you could sign a bipartisan piece of legislation,
just the optics of that, as they say, right,
are going to look good to a lot of people
on both sides. - Right. Okay.
Do you, expert, 1990's politics guy, Steve Kornacki,
have any guess or insight into who might have inserted
this provision into that 1998 bill,
because we're trying to figure this out?
Could you even hazard a guess?
- I have no idea.
But I think you're asking a good question--
how did we get here? - Yeah.
- Because it was not on anybody's radar back then.
- Even '90s politics expert Steve Kornacki doesn't know?
Well, in his defense...
Be honest with me.
Is it hard to describe things without the use of a big board?
- [laughs] It's freeing.
I like the air outside the studio
a little bit, too, I think, you know?
- Maybe I just needed to talk to someone who was in the room
when the bill was written.
A longtime aid to Ted Kennedy...
- Hey, how are you?
- Jane actually helped write the bill.
Are you ready to talk about the 1998 Higher Education Act?
- Wow. Am I?
- Surely she could point me to who did it.
- It'll be fun.
- I can't guarantee that.
Please don't put that kind of pressure on me.
So there must have been a lot of good stuff in this bill
because it passed unanimously.
What are some of the highlights about the bill that you're
maybe most proud of?
- So I love Title II.
I mean, as a recovering teacher myself...
- Jane's going to get pretty deep
into technical jargon here.
- And we thought SFA should be a PBO.
- But the takeaway is that there were a lot of programs
that helped teachers...
- Additional professional development...
- And kids.
And they were smart about a bunch of things.
- In 1998, nobody was thinking about distance learning.
- But...
All right, I'm gonna ask you about one particular provision
that some feel has not aged well.
- Okay. - Okay?
Two lines were inserted into that multi-hundred-page bill
that made it so that federal student loans cannot be
discharged through bankruptcy, making it basically
one of the only debts that you cannot
get rid of through bankruptcy.
- So now you're going to get into the weeds
of the sausage-making that is legislation.
You know, you have to separate sometimes,
when you're working on the Hill,
this is what I feel personally, and this is
what I have to do as part of my job.
Personally, I think it's-- it's crazy
that you can't discharge your student loans.
I mean, I think it was something
that was pushed out of control by somebody's misperception.
- Any idea who did it?
- I don't know who, so I don't want to pretend I know.
Some member had an idea that there was fraud
and bad acting going on,
that people were just going to school
and racking up debt and living high on the hog
on the loan program.
Look, the reality is...
- This may sound crazy, but it's true.
In the '70s, a formal study was commissioned
to see if people were gaming the system
and recklessly declaring bankruptcy to avoid
paying their student loans.
But what the study found was that
less than 1% of borrowers, or virtually no one,
was actually doing this.
If we were to try to find the person who was behind it,
do you have any leads or tips?
Or where would you go if you were me?
Where would you start this process?
- I don't know that anybody would take ownership of this.
I mean, nobody put their name on this one, right?
So whoever was doing it at the time
did not want to have center stage.
And I bet--I mean, I couldn't even give you a hint.
- Got it.
This mystery person really seemed to be hiding.
- Mr. Speaker, I yield one minute
to the distinguished gentleman from New York, Mr. Weiner.
- One thing working in politics taught me
is that politicians usually don't shy away from attention.
- Sit down!
- [auctioneering]
- But no one was taking credit for the bankruptcy exception
in the 1998 Education Bill.
And it was easy to see why through a very weird exercise
I subjected poor Dave to.
All right, Dave, I'm going to name
two different types of debts. Okay?
And you're going to tell me which one
is easier to discharge through bankruptcy.
Are you up for like, a lightning round
kind of thing here? - Sure.
- So please turn this way.
World's Saddest Gameshow!
We'll put some time on the clock, and here we go.
Unpaid taxes or student loans?
- Unpaid taxes.
- Business debts or student loans?
- Business debts.
- Bad checks or student loans?
- Bad checks.
- Car accident claims or student loans?
- Car accident claims.
- Credit cards or student loans?
- Credit cards.
- Gambling debts or student loans?
- Gambling debts.
- Excessive shopping or student loans?
- Excessive shopping.
- Collection agency accounts or student loans?
- Collection agency accounts.
[buzzer]
- Thank you for playing.
- [laughs] I hope I-- I hoped I passed the audition.
- I mean, that's pretty telling, though, right?
- Yeah.
- It's everything but student loans.
- It's insane.
And that's why there are so many people suffering.
It's making people into debt-- indentured servants.
[mellow twangy music]
* *
- This is where I reached
probably the darkest moment in my life.
It's a parking lot of a cheap hotel.
It was 11 years ago.
- I met Scott, whose debt story began 20 years ago
when he achieved his lifelong dream
of becoming a teacher.
- I love being a teacher. It is very fulfilling.
But I didn't make enough money to make
my student loan payments.
I started out with a $35,000 loan.
Somehow I now owe $150,000.
I couldn't provide for my family the way
they deserved me to provide for them.
That really, really, really screwed with my head
to where I just felt like an utter and complete failure.
[apprehensive music]
I remember thinking it was like being in the water
after you fell off a boat, and you're treading water
and treading water, and boats keep going by,
and you keep thinking,
maybe this boat will throw me a lifeline
and I'll be all right.
And then every time, the boat just kept going.
And I remember thinking, how long...
how long can I tread water before I drown?
That's when I really started to think
about taking my own life.
Eventually, I called my wife.
And she reminded me that the kids
need me and they loved me.
I'd like to think that I found courage at that point,
and I started to feel hopeful because I realized,
I just have to accept that this debt
is probably never going to go away.
You just have to learn how to live anyway.
You just have to keep going.
I almost didn't.
* *
- I think it's important that people be able to borrow
to make what may be the most important investment
of their lives, which is in their education.
- Remember this guy?
[tape rewinding]
We don't allow student loan debt
to be discharged in bankruptcy. - Right.
- I'd be at a loss to--
to explain why that should be the case.
- Okay, let me translate that wonky comment
into English for you.
- We don't allow student loan debt
to be discharged in bankruptcy. - Right.
- I'd be at a loss to--
to explain why that should be the case.
[upbeat percussive music]
- Was this even good lawmaking?
- Nice to see you.
- Ari Melber is MSNBC's Chief Legal Correspondent.
Though sometimes it seems he has a different beat entirely.
- No greater authority than Jay-Z saw "99 Problems"
when he says, "My glove compartment's locked.
"So is the trunk in the back. I know my rights.
You're going to need a warrant for that."
There's no such thing as halfway crooks.
We know that truth from the great poet Havoc of Mobb Deep.
And if you get really good campaign finance reform,
maybe money ain't a thing because it won't be a thing.
- 100%. - Yeah.
Although I don't like it if it don't bling bling.
- Okay.
- So if you have a law that says
virtually anyone in the country can file for bankruptcy
and get rid of their debts, anyone,
except for one group of people,
people who have student loans, that seems to me...
messed up would be my term of art for that.
- To me as a lawyer, I look at it and say,
if bankruptcy is available for all these other groups
so that they can go on and be, "productive,"
if it's available for corporations
or private bankers and business people,
why wouldn't it be available to a nurse?
- I'm--it's keeping me up at night.
I'm just trying to like unpack it.
It seems like it's part of 1,000-page bill.
You have these two lines, right?
Crazy enough though, there's two words,
"undue," "hardship."
They basically say, okay, you can discharge these debts
through bankruptcy if you can show that
you have undue hardship from your loans.
I'm gonna tell you right now.
I've been talking with people around the country,
they all pretty much think that they have undue hardship.
No one's like, this hardship is due, right?
That seems so vague almost as to be rendered meaningless.
Is that...
- Whether or not people can get the same benefit
that a random anonymous corporation
that might contribute less to society than a nurse...
- Right.
- That's a decision that I think is subject
to the politics and the power at the time
that decision was made. Do people want to reopen that?
I mean, I know that's what you're looking at.
I think that's a very fair question to reopen.
[inquisitive music]
- But in order to reopen it, I needed to understand
how this little-noticed but massive change
happened in the first place.
I needed my own Deep Throat--
or you know, something that sounds less gross.
- So this is what you learn in school is,
the House and the Senate have to pass
the exact same version of the bill
for it to become law.
So you know, when you go back to the beginning
and look at this...
- So I called in a favor.
- The House does its version. Senate does its version.
Then send it back down to the House.
- So that's a new bill they're sending?
- Right, so...
- This is Ryan McConaghy, a top policy advisor
from my days on Capitol Hill.
And no one in D.C. knows more about
how a bill becomes a law than him.
- Conference committee--and then, when we're at this point
in the line, you loop back...
- But it quickly became clear
that this was really complicated.
- Back to the Senate. - Oh, Lord.
- Then you head up here to the White House
to get signed into law. - All right.
You could see why this would be a little hard to follow
or confusing for anyone who doesn't
work in Congress for a living.
I mean, it's three, five,
eight steps at least right here.
So the provision that we're talking about
that basically said you can't get rid
of your student loans to bankruptcy,
when do you start to notice it?
- So actually, the first place a mention of it pops up
is actually back here in this little detour
to the Rules Committee. - Okay.
What does that suggest?
- That suggests it was part of a manager's amendment,
which include smaller things that individual members want
that just aren't worth the time to debate
because they're pretty non-controversial.
- I see, so this is where you could kind of slip something in
without a ton of public discussion,
without as much attention. - Yes.
- This was a big step.
Now we knew when it came in and that it
was slipped in where it was less likely to be noticed.
This enabled Ryan to come up with three top suspects.
- This is Chairman of the Committee,
Sponsor of the manager's amendment, Bill Goodling.
Technically, the manager's amendment
where this first pops up is under his name.
- So the first time we see any mention of this provision
is in the manager's amendment.
And he controls that amendment? - Right.
It doesn't necessarily mean it's his thing.
- It's not a smoking gun. But obviously...
- He would have been in a position to make it happen.
- Yeah.
Making this one of the most interesting things
Bill Goodling's ever done.
- Thing keeps popping out of my ears.
- A moderate Republican from Pennsylvania,
he was a former superintendent who is known
for being great with money.
[cash register dings] - [laughs]
- Next is Buck McKeon.
Representative McKeon was the chairman
of the Higher Education Subcommittee.
So he would have been the first crack at the bill.
He would have had to plausibly be aware
of what was in the manager's amendment.
- He even kind of looks like he is happy
he got away with something. - [laughs]
- Oh, I knew Buck.
Not only was the California Republican
on the Higher Education Subcommittee,
he also became chair of the powerful
Armed Services Committee...
- I think we would rather have our enemies
die than our troops.
- Where he was such a good friend to defense contractors,
he developed a lovely reputation.
- Third name, Senator Jeffords.
Senator Jeffords was the chairman
of the Senate HELP Committee,
which is in charge of higher education.
- Jim Jeffords, best known for switching parties in 2001
and swinging control of the Senate to the Democrats,
as well as for being part of the hottest act
to ever grace a stage.
all: * Every heart beats true *
* For the red, white, and blue *
* Where there's never a boast or brag *
- He is actually on record talking
about this provision at the very end of the process.
And he acknowledges that some people are disappointed
that it's in the bill, but that it was needed
to help pay for the overall cost of the bill.
- Wait, Jeffords says that? - Jeffords says this.
- So he's basically defending the bill publicly?
- He is defending the bill, and he's acknowledging
that there's some agita about this.
But he's--he's at least okay with it.
- All right. Thank you.
Now we have a place to at least start this.
- Yep. - All right, and so...
[brass music playing]
Do you hear that music out there?
* *
Well, this is a funny coincidence.
We were doing an interview about student debt
for a documentary, and look what we see.
This is a crazy coincidence.
We're shooting a documentary about student debt.
So what... [music blaring]
Can you have them stop for a sec?
Guys?
Tell me, guys, what are you here for?
What's your--what's your cause?
Who are you? What's going on?
- We are the 45 Million.
And we're an organization that's working
to cancel student loan debt. - Yeah.
- While I've been focused on the bankruptcy issue,
another fix was gaining even more momentum.
- President Biden said he's willing to forgive
$10,000 in student loans.
- As a candidate, Joe Biden issued a plan
that some in his party felt didn't go far enough.
- We have proposed debt cancellation
for up to $50,000.
- Still others wanted more.
- President Biden can take a pen, sign a piece of paper,
and cancel all the federal student loan debt.
- Who here has student debt?
- How much do you have?
- Too much. - Too much.
- 200,000.
- I have 40,000, and I haven't even graduated yet.
- And you haven't even graduated yet?
- Yeah. - I got about 140,000.
- Wow.
- How do you invest in a future
when you're constantly paying for the past?
- Yeah.
all: [chanting] Cancel student debt.
- But not everyone in the media
was singing the same tune.
- Does a debt hop on the back of a unicorn and fly away?
- If we're just willing to cancel student loan debt
like you mentioned, why can't we just
cancel the credit card debt?
- Student loan bailout, it's not going to teach
the students fiscal responsibility.
- Why should I have to pay for my neighbor's dumb daughter?
- Okay, at this point, it may be worth clarifying
some things about student debt cancellation.
- I mean, somebody is going to have to pay this money back.
- Because there's a lot of people confusing the issue.
- Shirking responsibility off of our backs
into the backs of taxpayers.
- Canceling debt does not mean that taxpayers
are picking up the tab or that anyone is paying
for your neighbor's "dumb daughter,"
as our friend here would say. - Uh-uh!
- Are the taxpayers going to have to pay a debt back?
No.
I mean, one thing we misconstrue
about the federal budget is that it's zero sum.
It's not.
The federal government diverts resources
to different sectors of the economy based
on the decisions they make.
- With student debt canceled, the money that would have gone
straight to the government instead
flows out into the economy.
Think of it as a stimulus, like the PPP loans.
- These are loans that turn into grants.
You use this to pay your workers.
We want you to have a business that you can reopen quickly.
- Most of those loans will never be paid back.
- How do we always have funding for things
that are deemed too big to fail,
but people, the American citizens
are not considered too big to fail?
When I can't do something for my home or my family,
it impacts my community, because that's
less money going into my community.
- So by canceling the debt, they are putting resources
in the hands of young people, which will not only
facilitate their own well-being,
but it will facilitate ingenuity.
- There are a lot of students who come to my office hours
who say, I'm really passionate about X.
But I'm not gonna do that because it doesn't pay.
I'm gonna graduate with so much debt,
I should probably just take a job
where I'm guaranteed to make money.
When you're constantly thinking about the price tag,
and you can't think about the passion,
that's where something has gone wrong.
- Professor Greer had a good point.
Thanks to student debt,
millions of adults are prevented
from contributing to society for financial reasons.
- My mom actually passed away from cancer.
And so I want to be able to do
what other physicians have done for my family
and be there for patients.
- Vivian grew up in a low-income neighborhood
in New York City.
She worked extremely hard and got into a top medical school
with the dream of giving back to her community.
- I want to be working in those
low-resource hospitals and clinics.
And that's where, like, my heart has always been.
But when I'm looking at potential jobs
for after I finish my residency, I have to consider,
with this salary, can I actually pay off my loans?
Can I afford to take that job that would be
more fulfilling, that would be a public service?
I want to be able to help, and my hands are tied.
- Vivian just wants to give back to society.
But some in the media see it differently.
- This is a giveaway to millennials
who have had their parents and family and society
pay for their bad decisions for their entire life.
- I'm so tired of hearing somebody say,
well, I've spent $80,000 on--
I got 75,000 of that in student debt.
Then go get a job.
- The more I looked into this, the more clear it became
that this issue often caused a stir
because politicians and the media hate millennials.
- Toughen up, and don't run to your safe space
every time someone says something you disagree with.
- In fact, they seem to blame them for almost everything?
- 40% of millennials don't eat cereal anymore
because it takes too much time to clean up.
- Dallas Police Department facing a staff shortage,
and the chief says millennials are to blame.
- Experts say millennials are
also to blame for the decline
of casual dining venues.
- Um, millennials really
killed casual dining?
- I mean, we do like Chipotle, I think.
But doesn't everyone?
- This is a real-life millennial.
- What--what do the older generations
get wrong about millennials?
- Oh, my gosh, everything. [laughs]
I think people associate, like, the millennial generation
with like, young people. And it's like,
"Shit, I have gray hair." Can I say shit? I don't know.
- We got to cancel this whole thing.
- Okay. I don't know what--
- She just-- - [laughs]
- Behind that offensive, despicable foul mouth
is a tireless researcher
who wrote a book about millennials
so she could figure out what the fuck was
going on with her generation.
- I think the older generation see us as being
entitled and narcissistic.
You know, okay. I get it.
Like, I probably am one of those millennials who,
like, have way too much education
and complain about the world too much.
I mean, we are overeducated, but that's not
necessarily paying off in the same way
that it paid off for them.
And I don't want to take away from, like,
our parents and our grandparents
who've lived through wars, but--
- Take away from them.
- I mean, we grew up with not only 9/11.
We--I, you know, graduated and there was a recession.
And then there was a recession again.
And at the same time, we're still being sold
the same American dream
that our parents you know, were told,
where, like, you know, just to get ahead,
just work hard enough.
And like, that's just not good enough anymore.
- The older generation is saying,
well, I paid for college. It's like, right.
College was $2,000 a year. Right?
Now it's set in that $50,000 to $65,000 range.
You haven't bought a book yet.
- Many have characterized this as just
a millennial or gen Z issue.
And in fact, the fastest- growing constituency
of those who owe student debt are 50-plus.
- That's Congresswoman Ayanna Pressley.
She wanted to clear up some misconceptions
about who's really affected by student debt.
- Within my district, I have senior citizens
living on fixed incomes, 76 years old,
still paying on student loans.
It's an economic justice issue.
It's a gender justice issue in that
women disproportionately bear the burden.
And Black student borrowers are five times more likely
to default on their loans than our white peers.
So it's a racial justice issue.
- I think especially Black Americans
have been told, the way to achieve the American dream,
like, education is the way for a leg up
if you want to acquire social capital,
if you want to make more money.
- If you want to see success in America
as a person of color, go to school.
And we are doing that.
But we've started out behind.
We still get job discrimination.
You know, we still get denied for mortgages at higher rates.
So I think, you know, being a Black millennial
means that we get all the shit-- can I say shit?
I still don't know. - Well, you keep doing it, so--
- I know. - Just--I don't know.
Like, can we...
That reminds me.
Who the fuck was responsible for the obliteration
of the American dream?
I needed to get back to our whodunit
and narrow down our suspects.
[intriguing music]
I got a mysterious call from Kevin
saying he had some high-level intel regarding my mission.
I asked him to meet me by the Washington Monument.
Kevin?
You know, to add to the intrigue.
My man.
You have a lead for me?
- I think it was Buck McKeon.
- How sure are you?
- All evidence points in his direction.
Out of anybody in Congress, McKeon had the best motive.
Between his committee assignments and the fact
that he was the recipient of thousands of dollars
in campaign contributions
from major college lending companies.
He had a lot to gain personally
by supporting key legislation on their behalf.
- How did you uncover this stuff?
- It's all public records, so you can go in
and see he was the primary sponsor,
not just a co-sponsor, but the primary sponsor of the bill.
And so you start connecting the dots of,
where is the money coming from?
And what are the motives for paying him that money?
And it's a perfect fit.
But the real key to me is,
he also sponsored the legislation
that helped privatize Sallie Mae,
one of the largest student lenders in the country.
At the end of the day, it's kind of like looking
for a serial killer, right?
The same guy keeps showing up at different crime scenes.
And eventually, the mystery is taken out of it.
We've got our guy.
Good luck.
- Thank you, man.
Phew.
Over the next few months, I made myself
a leading expert on Buck McKeon.
- Welcome back to our witnesses.
Any questions?
- Throwing myself into research,
I watched everything I could find.
- Uh... [clears throat]
- Including this beautiful promotional video
a local TV station presented to Buck.
- Buck was born September 9, 1938
to Howard and Phyllis McKeon.
- I learned so much about his roots,
I could have worked for ancestry.com.
- Dad called me his "Little Buckaroo," and it just stuck.
Ballistic missile defense...
- With the dulcet tones
of Buck McKeon haunting my dreams...
- Our nation cannot afford business as usual.
- I hopped a flight to his old congressional district
to investigate this suspect further...
Which is why I found myself in a nondescript strip mall
in Southern California.
Where are we?
- We're in the Santa Clarita area, north of Los Angeles.
And this is where Howard and Phil's Western Wear
used to be.
- This is Patrice Apodaca.
She's a former journalist from the "Los Angeles Times,"
whose beat included the Santa Clarita Valley,
home to a retail chain so well-known
it appeared in a special tribute video.
[twangy Western music]
- Howard and Phil's was a retail chain owned
by the family of Buck McKeon.
All kinds of boots, shirts, ten-gallon hats--
and they did very well.
They expanded in the '90s quite a bit
all over the Western states.
I think they had up to 52 stores at one point.
- Wow. - Yeah.
And then things went south.
They hit some bad times.
- They hit some bad times. - Yeah.
- Then what happened?
- They filed for Chapter 11 bankruptcy.
- That's right.
In 1996, Buck McKeon's family business took advantage
of that old American right--
the ability to get out from under your debt.
Wow.
So why would his committee then deny students that right
two years later?
- You know, I think there's a misperception that people have
that bankruptcy is something that lazy people
or people who just aren't good at managing money resort to.
But overwhelming majority of them
were the victims of bad circumstances.
- Long before working for John McCain
in Washington D.C.,
conservative economist Ike Brannon
worked for his dad, Jim,
back home in small town Illinois.
- My father was a bankruptcy lawyer,
and I spent a couple of summers working for him.
And I saw what he was doing was something that was really
helping a lot of people.
- In the 1970s, my father put an ad
in the Peoria "Journal Star" advertising his services
at a price well below what other bankruptcy lawyers
were charging at the time.
- When my dad advertised about student loan relief,
that made my dad a pariah in the Peoria media.
He was attacked on the local TV station.
He was attacked on the Peoria Journal Star.
The local bankruptcy judge at the time
referred to him in court as a shyster.
- This is the same panic that led
to that old 1970 study about whether students
were gaming the system.
They weren't, but that didn't stop the critics.
- So my father got a lot of attention,
not just in Peoria, but throughout the state.
And a couple of politicians expressed outrage
that my father would dare advertise such a thing.
And I think it did play a role in getting
state congressmen to vote to tighten
on the bankruptcy laws.
- For years, Jim and the family have worried
that bankruptcy rights were eventually removed
because of the ruckus he caused.
- This is part of his legacy, I think.
He really believed that
there should not be any exception
in the bankruptcy code for student debt.
- And if you're going to exclude just this one debt,
which for many people is by far the largest debt
that they ever incur, then the whole purpose
of bankruptcy is kind of negated.
[dramatic music]
- Speaking of which, Buck McKeon was ready to talk.
I wasn't going to let anything stop me
from holding his feet to the fire.
I was angry and determined.
And surprisingly hungry.
[inquisitive music]
* *
Satisfied with capturing some of the wall art,
I prepared myself to finally meet the former congressman
face to face.
- Who's Blake? - I am. Hi, Mr. Chairman.
Thank you for your time. - Good to see you.
- Enough was enough.
- Man.
- It was time to talk to this cowboy.
I was ready to rake him through the coals.
Thank you so much for your time.
You've had such a storied career.
I'm looking at all these seals on the wall and these--
all these things you have.
In 1998, what was your position at that time?
- 1998, I was chairman of the subcommittee
over post-secondary education, training,
and lifelong learning.
- Something that keeps coming up
is the Higher Education Act,
particularly the reauthorization in 1998.
I think it's safe to say
you had a pretty key part in that.
And one of the offsets that we noticed in there
was the provision to make student loans
not dischargeable through bankruptcy.
I'm wondering if you can recall
where that policy idea originated
and how you were able to get it in the bill?
- I don't remember.
In fact, that was a pretty big bill.
And I don't-- I don't remember all
of the--all of the details.
- You don't recall that as anything that you were pushing?
- It wasn't something--no. No.
It wasn't something that I was championing
or had strong feelings about one way or another.
- How could it not be Buck?
All signs pointed to him.
But would you agree that in your bill in '98--
that's when they barred dischargeability
for student loan debt?
- Like I say, I didn't remember that.
But I would definitely say it would be good to--
to relook at that.
- Wait. What?
- That is a problem.
- You think so?
- Yeah.
It's a real protection for people.
I have understanding and compassion for people
that have loans and--and people can't pay them off.
And in fact, I think that will be one of the next big--
big things that the country has to face.
But I think that's definitely a time to revisit.
- What was happening?
I'd spent months trying to track down
who was responsible for this provision.
- It's a tough thing.
- And Buck McKeon was suspect number one.
Now he was literally echoing my own thoughts back to me.
- I just think its-- it would be a good thing to--
to look at.
- Hold on.
This could actually be a good thing.
If Buck McKeon, the key sponsor of the bill,
seemed to want to change it,
maybe the person I was searching for would too.
But that mystery person was still a mystery.
And I was back to square one.
With my search ground to a halt,
I started to wonder if this was all worth it.
Was anyone else wondering who was responsible
for this obscure bankruptcy provision?
- I do wonder why student loan debt
is exempted from the normal bankruptcy protections.
How did that happen?
- Uh...great minds?
- 44 million Americans--
- Well, there was one other guy,
but nobody was listening to him, either.
- They cannot discharge this loan in bankruptcy.
Congress changed the bankruptcy law,
making student loan debts
non-dischargeable in bankruptcy.
College student loan is with you for a lifetime.
We need to restore dischargeability in bankruptcy
for student loans once and for all.
- Senator Durbin even introduced a bill
to fix the bankruptcy laws.
But that seemed to be going nowhere.
- For goodness sakes, how can we ignore
the crushing student loan debt across America?
- Who had caused this whole mess?
I wracked my brain for clues from all the conversations
I'd had over the past three years.
- Federal loans are handed over from the Treasury
directly to the Department of Education.
[echoing] Education...
- We met with the Department of Ed officials--
[echoing] Department of Ed--
- You know, it's certainly worth seeing if there's anybody
in the Department of Education who was around at that time.
[echoing] Department of Education--
- My name is Jamienne Studley.
And in 1998, I was acting general counsel
of the U.S. Department of Education.
- Maybe Jamienne could point me in the right direction.
The 1998 Higher Education Act made it so that federal loans
were non-dischargeable in bankruptcy.
Do you recall that piece of it?
- I recall it as a matter of law.
I don't remember the debates about it.
And we knew from the beginning that that was a problem.
- Yeah, and it's so relevant today, obviously,
in just ways that we never could have foreseen.
- But I think we teed up a lot
of really important ideas in the bill.
And I was very, very enthusiastic
about income-based repayment approaches.
- Oh, yeah, income-based repayment--
I'd seen some of those fun videos.
- Payments are based on your income.
So if you make little, you pay little.
- With these helpful-looking programs,
maybe there'd be no need for bankruptcy.
Just use the federal government's simple,
convenient tools instead.
- Let's say you win the lottery,
maybe just pay your loans off.
But if your situation changes, this might lower
your payments substantially.
- Lower monthly payments?
Now, that sounds like a deal.
I hear about these income- contingent repayment plans,
or income-based repayment plans,
or a public service loan forgiveness--
what's the matter with those?
- They are all cruel jokes,
and the borrowers are the punch line.
Millions of borrowers who have tried
for these various income- driven repayment programs
have been disqualified for one reason or another.
- And even if you do get into these programs,
they still have ways to enrage you.
- I had an income-based repayment plan.
That was a very affordable payment,
but the problem was that the balances kept growing
because I wasn't paying enough to cover the interest.
So you're actually really paying on a loan
while the loan grows.
And that really, really screwed with my mental health.
I was so overwhelmed emotionally
by this landslide that I was standing on.
No matter what I did, it just kept sliding.
- Yeah, and in terms of the income-based repayment plans,
putting aside whether it was a good idea,
do you feel like it's been a success in terms
of its implementation?
- It has been a challenge to explain.
It has some inherent weaknesses.
I'm sure in retrospect, everyone involved
wishes that-- that had gone more smoothly.
[inquisitive music]
* *
- With my search hitting a wall,
I needed new leads and a drink.
I feel--I feel a little stuck, honestly.
What's--what's new on your end on this?
- You know, I hit a bunch of people in my network.
I knew a few people who were working
on the committees at the time.
- These are, like, aides who were working
on the House Education--
- House Education and Workforce Committee,
Senate HELP committee--
you know, yielded some interesting results.
So one, you know, we talked about how
this is a big bipartisan bill, everyone wanted to see it go.
But there was a quest to try to find--you know, pay-fors.
- Wait. Hold on. What do you mean by pay-fors?
What does that mean?
- Places where they could save money,
cut federal spending, in order to pay for new spending
on something else. - I see.
- So it wasn't to drive this policy.
It was, they were looking for money to pay for the bill.
One of the places they go for ideas
is the Clinton administration.
It turns out, the Clinton administration actually
included this bankruptcy change in their recommendations
that they sent over to Congress earlier in the process.
So this idea actually came over
from the Clinton Department of Education.
- The Department of Ed-- I knew it.
- In sort of asking around, okay, so, like,
who was at the administration?
One name that's come up is-- it's got David Longanecker--
he was the Assistant Secretary of Education--
would have been involved in the discussions
between Congress and the administration, so.
- So I got to talk to David Longanecker?
- Yeah.
- Well, David Longanecker was the person
in higher ed policy.
He was a huge player, high integrity,
ethical, and incredibly smart.
- David Longanecker, L-O-N-G, A or E, N-E-C-K-E-R.
He'd be a great guy to talk to.
He's terrific.
- We do think the system can work a lot better.
So let me present to you at this time
David Longanecker, who is Assistant Secretary
for post-secondary education.
- Thank you, Mr. Secretary. What I'll do is...
- I watched hours of Longanecker video.
He seemed to have a particular focus.
- And in addition, that if a student
hasn't repaid their loan, we'll go after them.
We've been doing a lot of that.
We've been using wage garnishment,
and we've been using IRS refund collections in the program
very successfully over the last few years.
So we'll go after those students who default
very aggressively and very quickly.
We collect every dollar that can be collected.
We pursue defaulted loans with a vengeance.
We use collection agencies.
We garnish your wages.
- Fast forwarding to the present,
Mr. Longanecker retired from higher education
to pursue his true love.
He was now a commercial truck driver in Colorado.
[truck horn blares]
[suspenseful music]
* *
Even if Longanecker wasn't our guy, I wondered,
with such a long career in education,
had he seen the damage this provision had caused,
from spiraling college costs
to massive debt and ruined lives?
* *
As I sat there preparing, I started to get nervous.
Like Buck McKeon, was this another dead end?
Was I just wasting everyone's time?
So let's--let's talk about a decision
that was made in 1998 during the Higher Ed Reauthorization.
Talking to the Congressional staffers from the time
with respect, specifically, to the provision that
barred student loans from being discharged
through bankruptcy-- - Sure.
- What they said essentially happened is that
there were a number of programs that people wanted.
And so they went to the education department
and you for ideas.
And then that's where kind of that idea developed.
Does that sound about right?
- I think that's fair representation of the time.
- Okay.
It was now clear.
We had finally found our man.
- Got it.
So it's 20 years since the 1998 Higher Ed Reauthorization Act.
- Yeah.
- And the bankruptcy provision, in particular--
how much time have you spent reflecting on that decision
that you guys made back then?
- I have--I don't--
it wasn't the most dominant thing
I've thought about since then.
I have in many conversations, defended what I think
was a reasonable decision,
that these are obligations that people make.
And that when people accept an obligation,
they have a responsibility to attend to that.
And if students actually defaulted, they weren't--
they simply weren't acting in good faith.
- So you just made a point that, you know,
people should meet their obligations, like you said.
But given not what the intention was,
but what the result has been 20 years in,
does that give you some pause and make you think
maybe it is worth, you know,
reopening that option for bankruptcy?
- No.
I can understand why people would come at that.
But that's why we created the Income Contingent
Repayment Plans, a failsafe for the students
who were serious about their loans.
- But there are millions of people who applied,
got kicked off because they-- there are all sorts of reasons.
We have to get into all of them.
But we are now 20 years in, and we've seen what happens
when it's implemented.
Does that concern you?
- Well, yes.
But the answer I don't think is to go to a system
that I don't think has the right sets
of responsibilities.
I mean, I think that Income Contingent Repayment
is a more reasonable response than simply discharging
the loan in bankruptcy.
- Okay.
But do you believe in bankruptcy in general,
just as a general-- - Sure.
- I mean, it sounds like you-- - Sure. I do. No.
I believe in bankruptcy as a general provision
for people who really get hammered,
give them a chance to start over.
- Right.
Look, we have pretty much dischargeability
for bankruptcy for almost any debt you could have.
You and I can go to Vegas tonight,
and maybe we should, lose $10 million,
and then we have a chance
to discharge it through bankruptcy.
The one exception is people with student loan debt
struggling as a result of that.
And so are you sympathetic to the point
that these students have been singled out?
- Well, I guess one could look at it in that fashion.
But you also don't want something--
I mean, you mentioned the borrowers.
Most of those are repaying their debt.
And they're doing so, not comfortably, nobody is--
- They're struggling.
Yeah, a lot of them are struggling.
- They're struggling, at least in their own mind,
they're struggling.
[dramatic musical sting]
And--but most of them are repaying their debt.
Default rates are higher than they've been,
but they still aren't terribly high, and--
- I think--sorry to interject, but I think it is possible
for someone to have a tremendous amount of debt,
not default, and still be struggling
as a result of that.
And for what it's worth, tuition, as you well know,
is triple what it was back then,
but wages have stagnated.
Does that interest you at all?
- Yes, but not convincingly.
- Look, these people are paying their loans
well into their 20s, 30s, and 40s,
often even into their 50s right now.
They're not buying homes as a result.
They're buying cars later.
They're starting families later.
And Powell, the Fed Reserve Chair
said there could be some macroeconomic problems
that occur as a result of that.
So do you think it's working?
- I think it's--yeah.
I mean, you've got 44 million borrowers.
[inquisitive music]
And so I think it works.
- I had met the man behind the bankruptcy rule,
and he was not backing down.
- I still believe that the-- the right incentive is to say,
there's a safeguard here.
But you have a major responsibility
to repay your loan.
- For the next hour, he offered a range of opinions
to support his position.
- My daughter paid off her entire student loan.
She was able--and she was in the Income Contingent Program
because her dad knew about it.
- Not everyone has you for a dad.
A lot of people don't know about it.
- I mean, we have an awful lot of students
who are in Never-Never Land today.
But on average, their debt isn't all that substantial.
- He concluded with a final thought
that encapsulated his position more than anything else--
- For the ones who put themselves
in exceptional debt, they were the damn fools,
not the federal government.
And they should accept the responsibility
for that foolishness.
- Thanks so much. Appreciate it.
- My pleasure. - Okay.
- Believe it or not, he was right.
This mess was caused by damn fools.
Only it wasn't decent people
like Vivian, Alan, or Marcella,
but the damn fools in Washington
who turned a blind eye for decades
and never tried to stop it or fix it.
Now it was time for solutions.
The good news-- there's an easy way
to get help with your student debt.
Look what I found flipping channels one day.
- Hey, I'm Michael Torpey.
My show "Paid Off" is the only game show
working to end the student debt crisis.
- If you can't get on the show,
I saw another easy fix on "Ellen."
- Give you $50,000-- - Oh, my God!
- Well...
all: [chanting] Cancel student debt.
- There was always that cancellation idea.
- Somebody has to foot the bill.
- If you watched a certain network,
you might think the only ones who supported that idea
were crunchy liberal activists like this hippie.
- [laughs] No, I'm not a hippie.
You know, as I got older in life,
I wish I'd been one earlier.
- This is Wayne Johnson.
And his background is not what you'd expect.
- I was with the Trump administration.
- That's right.
Under Trump, Wayne oversaw the federal government's
Student Loan Program.
And from his position, he could see
just how insanely far gone the system had become.
What Wayne did next would become a big news story.
- A top official in the
federal Student Loan Program
resigning this week,
calling the system,
"fundamentally broken." - He quit.
And the conservative former Trump official
hit the media to unveil his plan
to cancel student debt.
- He would forgive more debt than plans proposed
by Democratic presidential contenders
like Elizabeth Warren.
- Hearing a Republican say he believed in debt cancellation
got some attention.
- If we don't fix it, what will happen?
- Well, if we don't fix it, we're gonna continue
to have an ever-increasing destruction
of the fabric of America.
I mean, it's that profound.
- Was Wayne sure he wasn't a hippie?
- No, I'm not a hippie.
I'm a pretty straightforward guy.
[upbeat percussive music]
- You guys were told,
this is what you need to do to get ahead.
And if you do it though, oh, actually, you're not ahead.
How does that make you feel that that promise is false?
- Well, the promise is false, but the solution is true.
- Okay. - For sure.
- Braxton and Wen joined the Debt Collective,
a group pushing for student debt cancellation
with a caveat.
- I mean, we advocate for full cancellation.
But, like, if the president were to cancel
all student debt tomorrow, we'd have
some student debt next semester.
And so how do we figure that out?
How do we solve that problem?
The answer is free college.
- Our parents, grandparents' generation,
they didn't go to free college. both: Yeah.
- With immigrant parents, it was like,
they work their whole lives to send their kids to school.
And we grew up, like, very rural China.
And the thing that they always say is, like,
there is more chances to thrive in the U.S.
So the paying of school wasn't a problem
they were thinking about.
They were like, we're going to do this no matter what.
Like, whatever it takes, we're going to pay
for whatever school I get into.
- And the only way to pay for college,
unless you're rich, is with a loan.
- Yeah.
- Meanwhile, as the cancellation discussion
heated up, Senator Durbin finally seemed to be
making progress on his bill to restore
bankruptcy protections.
- So I look forward to working with my colleagues
across the aisle to pass
the FRESH START Through Bankruptcy Act.
This is an issue that I have dealt with for a long time.
* *
- I'm gonna take you to my favorite coffee shop.
- Oh, cool.
I check back in with Alan
on this latest development that could finally
end his 17-year pursuit.
- We have a bipartisan bill, S.2598.
Dick Durbin is the sponsor.
- Wow.
- Today, I'm introducing a bill with Senator Cornyn.
I thank him for joining me in this bipartisan effort.
- This is an important issue.
And I think our bill,
the FRESH START Through Bankruptcy Act
will provide an important--
important relief to students.
- Our bill would restore the ability
of student loan borrowers to discharge federal student loans
after a waiting period of ten years.
- This ten-year window would help students
without encouraging strategic bankruptcy.
- Uh, there's a ten-year waiting period,
which is not perfect,
but that is where the solution to this problem begins.
- So now that the bill had bipartisan support,
it might actually have a chance of passing.
Right?
Is that bill moving at all?
Is anything happening with that as far as you know?
- Uh...
well, I don't know.
- I mean, you're the foremost authority on this.
- I don't know.
- Okay.
- I think we're close.
But I don't know.
I got to get some cat food.
- I didn't blame Alan for feeling nervous about it.
After nearly two decades of fighting for change,
I wouldn't want to get my hopes up, either.
- Oh, sh--sorry about that.
- With a bipartisan bill introduced,
it was time to work every connection I had
to get a meeting with my former boss.
So we are in Washington D.C. now.
We're headed to the Capitol.
We're going to see Senator Schumer today.
And this is the guy who basically
can help actually solve this.
He's the Senate majority leader.
And no one gets access to talk to a senator like this,
and so I feel fortunate to be able to have that opportunity,
but it feels like trying to ask questions
for all those people who are going through this
and get answers to these questions
that affect all of them.
So that's sort of what's going through my head right now
is basically, don't screw this up.
This was my chance to get the Senate majority leader
on board with my mission.
[suspenseful music]
* *
- Hello. Good mask.
- Okay.
- I had just 20 minutes with the senator,
and I needed to use the time productively.
- Okay, we got to get moving, guy, we're taking too long.
- [indistinct] put in your pocket right here.
- Okay. Thank you.
- It's going to be three or four questions, easy stuff.
- Okay, good.
- Okay, Senator, there's 45 million people
with student debt in this country.
What was the tipping point for you?
What was the turning point where you realized,
this is an epic crisis?
- Whenever I walked around New York State,
not only young people, but middle-aged people,
grandparents were talking about the burden of debt.
"I didn't take the job I wanted because of student debt.
"I didn't get married because of student debt.
I had to move somewhere because of student debt."
It discombobulated people's lives in a significant way.
- For doing the right thing-- this is people--
we tell them go, work hard, go to college,
get an education, and then boom.
- Exactly.
You know, when I went to college,
I didn't come from a wealthy home.
I worked my way through school.
But I got out of school debt-free.
And what's happened over the years is,
this thing is just spun out of control.
I've been pushing President Biden to do this.
- To do what?
When you say to do this, what do you mean?
- To cancel $50,000 of student debt.
He can do it with the flick of a pen.
No legislation, no going to Mitch McConnell,
who isn't for this anyway, but just doing it on his own.
I'm gonna wear this mask on the floor of the Senate
until President Biden signs that document
in the White House that says
$50,000 of student debt is canceled.
- You're the Senate majority leader, very powerful person.
Why do you want to have the president do it
instead of going legislatively?
Are there are certain roadblocks...
- Well, yes. - That make it harder?
- In the Senate, you would need 60 votes
to cancel the student debt.
That would mean getting some Republican votes.
And the Republicans-- we haven't found
any Republican supporters.
Frankly, we don't have every single Democrat
on board for this.
So if I had to put it on the Senate floor,
it would be a struggle, and it might not pass.
- Well, I knew about one proposal that already
had bipartisan support.
Senator Durbin has a bill that would make it so that
student debt can finally be discharged through bankruptcy
the way every other-- if you're delinquent
on your income taxes--
- You know, the debt-- the debt--
the deck is stacked against the kids, against the students.
- Wait a minute.
Had Durbin not lobbied him about the bill?
Yeah, so let me ask you this.
So Senator Durbin has this bill that
would reverse that provision.
- Hey, listen, it's something I would obviously look at.
- I had to get this on the senator's radar.
Just to tell you, the 1998 Higher Education Act
passed unanimously.
The Higher Education Act, good bill--
at the very last minute, someone snuck in
a two-line provision that said
you can't discharge your student debt
through bankruptcy. - Really?
- And we found-- - From some bank.
- We were trying to figure out where it came from.
- Who?
- It turns out the person whose idea it was,
was a bureaucrat at the Department of Education.
And that guy now is a truck driver in Colorado.
- Oh, what a great thing.
- So I mean, I thought I'd tell you that.
But knowing what you know about D.C.,
does that surprise you, that story,
that somebody like that-- - It still does.
Yeah, something like that, because that's really weird.
- Yeah.
Thank you so much for your time.
- Okay. Let's take this off. - Appreciate it.
- I'm running late for my lunch.
- So Senator Durbin has this bill that
would reverse that provision.
So now, you would be able to get rid of that debt
through bankruptcy. - Yeah.
- And Senators Cornyn and Hawley just joined
and said they would be for that.
So that's got a bipartisan--
- Yeah, thanks. - Okay, terrific.
- Thanks again. Appreciate it.
- I'll email your staff about the bankruptcy thing.
- Yeah, thank you. - Sir?
- And good to see you too.
Appreciate it.
This was big.
I couldn't wait to call Alan back in Wisconsin.
How you doing?
- We met with Schumer.
- Yeah.
I asked him about bankruptcy.
Do you know about this bill that Durbin's got
that, like, Cornyn and Hawley are on right now?
And he didn't seem to fully be aware of the bill.
- Well, listen. He seemed very amenable.
He was into it on the merits and the substance
and all that kind of stuff.
I think he's gonna like, look into it.
- Well, listen. It's on his radar now.
And I'm gonna send it to his team tonight.
And it's better off than we were three hours ago.
[inquisitive music]
* *
- Not long after my meeting with Senator Schumer...
- He continued to bang the drum for cancellation...
- At a press conference on student debt.
- But what most didn't notice was a response he gave
in the post-conference Q&A.
"It's outrageous," he said,
"that other people get to declare bankruptcy,
but students can't."
This was exciting.
With real momentum on the bankruptcy issue,
it was time to speak with the man himself,
Senator Dick Durbin.
- Hello.
- Right here. Please, sir.
Watch your step.
- Nice to meet you. I'm Blake.
- Well, thanks for sitting with us.
We are focused on student debt,
particularly the issue of bankruptcy.
The 1998 Higher Education Act,
there was a one or two-line provision that was snuck in.
And you were in Congress at the time.
Do you remember that?
- It really was not even publicized.
It was not brought to the attention of most members.
It wasn't until it was all over,
you look back and say, oh, my God.
Two lines in a bill changed the lives
of millions of Americans.
- You are the person who has been pushing
for a solution to this.
You have a bill that would essentially reverse this.
- Yes.
- Does this bill have a chance of actually getting passed?
- If you take a look at the composition of the Senate,
and you look for odd couples, certainly,
Dick Durbin and John Cornyn of Texas would be an odd couple.
I like John, but we don't agree on much.
But we put a bill together.
It says there would reach a point after ten years
of your student loan, where you can
discharge it in bankruptcy.
- Now, you mentioned Senator Cornyn,
and I think that's important.
Senator Hawley, I understand, is also supporting this bill.
So you have a real bipartisan group of senators
that you've put together.
Do we have the votes for this?
- First things first-- committees.
The bill has to go through the committee.
- I wanted to get a pledge from the senator
that he'd move the bill to the committee ASAP.
Bringing it to the committee-- you're the chair.
- Luckily, I'm chairman of the Senate Judiciary Committee,
and John Cornyn sits on the committee, Hawley as well.
So the three of us is a starting point.
We need 12 votes to report it out of the committee.
- And you're saying you're determined
to do that this session? - Yes.
- That's terrific.
- Easier said than done in the Senate.
When you say you want to bring an idea to the floor,
then we have to beg Schumer to give us a niche,
a piece of the calendar so that we can call the bill.
It takes some time, you know?
- I don't know if you know this already.
We spoke to Schumer very recently.
And he said he's now very interested in this.
And he seemed open to it.
I don't think it was really on his radar.
And then just a couple of days ago, he was quoted
saying, "Oh, absolutely.
"People who have student debt should be able
to discharge it through bankruptcy."
So I'm giving you a tip that I think that if you get it
through your committee, his eyes are more open
on this bill than I think he used to be.
- We absolutely need him.
He decides which bills come before the Senate.
And his personal commitment is essential.
- I don't want to give people false hope.
But do you really think there's a chance?
- I think there is a chance.
And we're going to try everything
legitimately possible to move this bill
through the Senate this year.
- Thank you very much. - Thank you.
- I appreciate it. Thanks for your time.
Your discussions with Schumer might be different,
but when I met with him in November,
he was like, oh, I'm definitely open to it,
and I got him the information.
And on Friday, I was shocked. I read this article.
It said Schumer was asked about bankruptcy for student loans.
And he's--and he was-- the talk--
he was right on message, whereas when I met
him a couple of months ago, he wasn't.
So I'll send it to Teresa if that's okay.
- Okay. Thank you, Senator.
Thanks so much, Teresa. - Thanks [indistinct].
- Awesome. Thank you.
- Something major just happened.
- Yeah.
- I don't know if that was evident.
Probably sounded like a boring conversation, but--
I knew things moved at a glacial pace in the Senate,
but this felt like actual progress.
- Hello? - Alan, it's Blake.
- I just finished talking with Durbin.
And I have a pretty big update.
I said, I think Schumer is convinced.
And he said, he pledged to me, that he will bring it
to a committee this session.
- Stuff is happening.
* *
[marching band playing "America the Beautiful"]
* *
- We are poor because of our student loans.
- I mean, it makes me angry.
["You're a Grand Old Flag"]
* *
singers: * You're a grand old flag *
* You're a high-flying flag *
* And forever in peace may you wave *
* You're the emblem of *
* The land I love *
* The home of the free and the brave *
* Every heart beats true for the... *
- Here's all the paperwork from Sallie Mae,
deferment requests that were rejected.
Fuck off.
I'm protesting. I'm burning it all.
singers: * Keep your eyes on the grand old flag *
* Every heart beats true *
* For the red, white, and blue *
* Where there's never a boast or brag *
* Should old acquaintance be forgot *
* Keep your eyes on the grand old flag *
* Every heart beats true *
* For the red, white, and blue *
* Where there's never a boast or brag *
* Should old acquaintance be forgot *
* Keep your eyes on *
* The grand old flag *
[cheers and applause]
- Hey, hey, hey! - All right.
- It worked out again.
- Anytime we start together and end together, we celebrate.
[applause]
[inquisitive music]
* *