Downloaded from YTS.MX
[exciting music]
- [interviewer] Roll it. - Is this... Is this good?
Official YIFY movies site: YTS.MX
[interviewer] Camera's rolling. Sound speed.
[Melanie] In the last decade, student loan debt
increased by an average of 91 billion dollars per year.
[Constantine] Schools are just incentivized to sign up
anybody for a loan and not think about:
can this person get a job, are they going to be able to repay?
[man] College should be a ladder up.
For too many people, debt is the anchor
that weighs them down.
[woman on the news] There was some kind of crown put atop
a four-year college degree.
[Tucker Carlson] This is hurting the country badly.
So, when I look at the question about should
student loans be forgiven, implicit in the word forgiven
is that someone did something wrong.
The student loan program was a program
started with the worst of intentions.
I just spent $50,000 on this degree.
You would think that it would mean something.
You know, I pay all this money in,
but am I really getting what I...
what I'm putting into it?
[Dane] Baby boomers only had to work 306 hours
to pay off their college tuition.
Millennials today would have to work 4,459 hours
at minimum wage to pay off a four-year college degree.
Everybody who is in high school now sees the debt
being erased, then they're going
to borrow as much as they want and maybe
more because, eh, it'll, you know, I'll wait
for the next round of forgiveness.
It was supposed to be
for the impoverished and low income people.
On the student loan issue
there's quite a bit of low hanging fruit.
Things that could be fixed, but that take
a tremendous amount of time to be implemented.
And unfortunately, in the meantime, people suffer.
[news anchor] Several Democratic lawmakers
have unveiled a plan to cancel thousands of dollars.
[Elizabeth Warren] President Biden could cancel
$50,000 worth of student loan debt
basically with the stroke of a pen.
A.O.C. is overreaching here and it's a bad policy.
[Constantine] We need to think hard about
the distributional consequences.
Who benefits and who pays?
[Elizabeth] The guaranteed student loan program.
What that title does not tell you
is the guarantee was for bankers.
The guarantee was that if a banker
put out the money for this incredibly
risky financial product, the banker would be repaid.
Not that a student would get admitted, not that a student
would finish, not that a student would
really be able to compete with a well-paying
job with equal pay.
The banker would be repaid.
[Joe] And we're going to have a new wave
of a different set of concerns over time.
This program that was beneficial,
it's become almost like a curse.
- It's a ripple effect. - [Elizabeth] And I think it is
one of those great tragedies.
It makes you see a lot of American history
in a different way.
[Michael L.] The American dream
has almost been weaponized to induce people
into borrowing loans because you have to go
to college if you want to live the American dream.
[Dane] We don't talk about debt and money and how to handle
that properly with our parents or in our upbringing.
We don't talk about that in school.
Of all places, we should be taught that in school.
Certain decisions can be catastrophic
and lead to lifetime consequences.
It just doesn't make sense that this could come out of nowhere.
It just doesn't.
[Michael L.] The solution to the student loan crisis
is probably expensive.
It's not going to be perfect.
There is no magic wand that makes everything better.
Some people are going to end up much better off
than others no matter how we fix it.
And because when people don't like the solution
to the problem, they deny the existence of the problem.
[emotional violin music]
[purposeful string music]
[rain spattering]
Should I...
Is this... is this good? Does this work?
[interviewer] Yeah, that's perfect. Roll it.
Camera's rolling. Sound speed.
Okay. I'll practice my "I'm Melanie Noel Hanson."
No. Melanie Hanson. Sorry.
[laughing] Hi, I'm Melanie Hanson.
I am a research analyst and senior editor
at the Education Data Initiative.
- [interviewer] Awesome. - Okay.
I always wanted to be a writer.
Well, I got my master's at the School of the Art Institute
of Chicago and, you know, said to my...
some of my classmates, like, "Ah, yeah, I love...
I love writing, but gosh, don't you miss math?
Just, don't you... don't you just want to do some math homework?"
And they're... "No!"
I focus a lot on fact-based evidence.
I also taught academic writing at the college level.
I realize that the emotional side
of the argument, the personal anecdotes,
they're very useful for helping people understand
a problem and empathize with the... the people affected.
But the thing I like about data, I mean,
you can look at these numbers and say, "Look, this...
this is a fact.
This isn't just somebody's story,
and maybe it happened and maybe it didn't.
This is the actual 1.75 trillion dollars
is how much we all owe in student loan debt.
It's... see, it's right here."
The Federal Reserve website.
You can look at it.
♪
[city din]
[Constantine] Student loans are a nuanced, uh, problem.
And nuanced problems require nuanced policy solutions.
My name is Constantine Yannelis.
I'm an assistant professor of finance
at the University of Chicago, and most of my research focuses
on the student loan market and human capital investment.
♪
There's definitely very strong academic evidence that
colleges have raised their prices due to government loans,
and this was first proposed by William Bennett, the, uh,
Secretary of Education in the Reagan administration.
And this idea that government loans
lead to higher tuition is often called
the Bennett Hypothesis for that reason.
And I think in the eighties or the nineties,
it was viewed as kind of this crazy idea,
but now it's commonly accepted, and there's quite a bit
of evidence that government loans do cause higher tuition.
♪
There are a lot of indicators that we have
a very serious problem with student loans.
We've got nearly two trillion dollars
of student debt, people are living with student loans
for decades, delaying having kids,
delaying getting married, they're unable to buy a house.
It affects every major decision
that an entire generation of people are making.
We can do better.
Student loans should be a tool for generating access,
but they've gotten so out of control
that it's scaring people away.
♪
My name is Michael Lux.
I am the founder of The Student Loan Sherpa,
and I guide people through repayment.
♪
The idea behind The Student Loan Sherpa,
where the name Sherpa comes from.
The Sherpa are the guides who help people scale Everest.
And the reason these Sherpa are such
excellent guides is they've been there before.
And I still have student loans.
I've been there.
And I don't know all the issues
that every borrower faces, but I do know the stress,
I do know the pain, I do know losing sleep over student debt.
And the website is designed to be
a resource for people to get answers
to the questions that are keeping them up at night.
And it's to guide them through their mountain of student debt.
Student loan debt has surpassed credit card debt.
It's surpassed motor vehicle loans, title loans.
It's surpassed every other type of debt except for mortgages.
[Melanie] So, you have mortgage debt,
which is huge, like, an unfathomable-ble...
unfathomable amount of money I can't even conceive.
It's like Jeff Bezos type of...
maybe not that much.
But, like, more money than I can imagine.
And then student loan debt, second only to that.
It's got to have a tremendous impact on our economy.
There's no way it... it couldn't.
♪
[Constantine] Now, in terms of why are
student loans different from a car loan
or a home loan, there are a couple of reasons.
So, one: if somebody defaults on a car loan
or a home loan, we can seize that asset.
So, it's collateralized, whereas with a student loan
there's no asset to seize.
Another major difference is that these are
18-year-old kids, essentially,
making borrowing decisions with no underwriting.
And because of this perverse incentive system
that's been created by government loan programs,
schools are just incentivized to sign up anybody for a loan
and not think about: can this person get a job?
Should this person be doing this, uh, degree?
Are they going to be able to repay?
♪
Do you want me to take my mask off?
- [interviewer] Now is the time. - [deep inhale]
Hi, I'm Elizabeth Tandy Shermer.
I'm an associate professor of history,
and I am focused on U.S. politics,
U.S. economics, labor rights, um, the histories
of working people, law, public policy,
looking at the intersections of all of those things.
It is incredibly dangerous
that it's so easy to get these loans.
That you can just click through so simply.
And I actually had a friend who used to work
in the student loan industry, and she talked about...
they had the time.
About how quickly people clicked through that,
and it was just seconds. It was just seconds.
And it's dangerous because it's just something
that you click through on yet another website, yet another
form that you're trying to do is you're trying to pursue
your dream, um, of going to college,
that it doesn't teach you.
You don't learn about the intricacies of these loans.
♪
[Ivis] Somehow, when you put the word
student in front of, like, loans, it doesn't
sound like you should be thinking twice about it.
So it doesn't feel like you're actually taking on actual debt.
There's not a lot of responsibility
in the decision making.
When you are taking a mortgage it requires a lot more, right?
So, you have to have your credit score,
employment, and have some income in order to pay for this.
But there's no responsibility, proof of income,
or anything that you have to show taking a student loan.
[Elizabeth] It seems like it makes...
in theory, it makes higher education more accessible.
But in practice, if it's just seconds that people
are clicking through, it really is dangerous.
It's not really the thoughtful
consideration about what someone is entering into
and what you're also signing up for.
And I do think that is profoundly dangerous.
[disheartening music]
[Isaac] You know, oftentimes it feels
like a pyramid scheme...
here in the United States.
The people on top, you know, they're making
all the money, and the people at the bottom
are the ones that are struggling.
Where's my Weber diploma?
It really isn't worth as much as I paid for it.
Yeah, I don't even know.
I honestly haven't even looked at it since, uh, since I got it.
♪
[Isaac] This... having this degree,
you know, I just spent $50,000
on this degree, you would think that it would
mean something and that you could...
you could actually turn around and get a high-paying job.
But that's really not the case.
You know, I pay all this money in,
but am I really getting what I... what I'm putting into it?
Like, are they... are they giving me that proper education,
or is it all just watching movies and theory
and things that might help me a little bit, but in the real
practical world, it's not transfer...
translating over.
♪
One of my concerns is education in this country
was set up for a very specific reason:
to really raise, uh, the lower class
and middle class up from an educational standpoint.
And, uh, and it does exactly that, right?
But I think when you get to the college
or university side of things, it's become way
to commercialized, and I think it's more of a business.
And... and these... these colleges don't
have the students' best interest at heart, right?
They're running a business,
they're... they're looking for profit.
[Taylor] My name is Taylor Nadauld.
I'm the H. Taylor Peery professor of finance
in the Marriott School of Business
at Brigham Young University.
I teach courses in corporate finance,
venture capital and private equity,
and I do research in consumer credit markets.
So, for the past 12 years since I've been
a scholar, since I finished my PhD,
my research has been in consumer credit markets.
Student loans are one of the biggest
segments in the consumer credit complex.
They represent a really important aspect of how,
you know, of how people's financial lives are organized.
Part of the reason that we don't know as much about student
loans perhaps as we might want is because it's just really
hard to get your hands on the right set of data.
There's this really pernicious relationship between
the supply of student loans and what it costs
to go to college.
And so, because that relationship is reinforcing
the... the more student loans are made available to students,
particularly through the federal government,
the more expensive it gets to go to college.
And so you just have this pernicious
relationship where tuition costs increase
and student loan balances increase in concert.
♪
[Constantine] And really the core of the student loan
problem, as I see it, is an incentive, uh, problem.
And this incentive problem is created
by these government loans.
So, the problem is that the revenues
of these for-profit schools are disconnected
from the actual outcomes of the students.
If we have a revenue-maximizing for-profit school,
if we have a for-profit school that just wants to make money,
what they can do is find warm bodies,
essentially, get them to sign up for a government loan,
then those, uh, students pay tuition to the school.
After they pay their tuition they drop out,
they don't find a job, it's not the school's problem.
They already got paid. You know whose problem it is?
It's the taxpayers' problem because the borrowers
are going to default on their loans
and taxpayers are going to pick up the cost.
So, we have no mechanism of aligning
the incentives between the school and the borrower.
And I think that's why we see this predatory
behavior on the part of for-profit colleges.
[ominous music]
For-profit colleges and universities,
almost 90 percent of their revenue comes from federal aid.
So, the way that you qualify for federal aid is
that you fill out a FAFSA that helps the government
determine... determine your financial need.
And you compare their reported cost of living
off campus, cost of living in a given city,
compared to the off-campus cost of living
in the same city for a... for a not-for-profit university.
Those differences have been
substantial in some places that I've seen.
Why does that matter?
That matters because it allows applicants to qualify
for a higher need, and therefore to qualify
for more money which would allow them to pay a higher tuition.
Did that... did that make sense?
What I want to say is that I think there... there are
some examples of for-profit colleges and universities...
at being really aggressive about helping their students
qualify for loans and that they do it for their benefit.
[news anchor] Top for-profit colleges
like DeVry, Remington and the University
of Phoenix received 24 billion dollars
from federally-funded student aid money last year.
These are schools that allegedly were
misrepresenting their enrollment benefits,
job placement rates and program offerings,
often leaving students with big debts and no degrees.
[news anchor] Critics say the reason these for-profit
schools are keen to enroll students is big money.
[Constantine] And it's really, these for-profit institutions
that are driving many of the very adverse
outcomes that we, uh, that we see.
So, they account for about 10 percent of, uh, enrollment,
about 20 to 25 percent of student loan borrowers
and about half of all loan, uh, defaults.
So, these schools are disproportionately the problem.
[anonymous man] They're more concerned about the bottom line.
What is the bottom figure on this student?
They look at, "How much money did we make
this term or this quarter?"
Many of these for-profit schools are allegedly scams.
[woman] On average, people who go to for-profit
institutions are much more likely to borrow,
to borrow more, and not to be able to repay their loan.
[Taylor] And so the issue with the federal government
is that they're really liberal in... in providing
the supply of student loans, which is excellent,
we want our population to be educated,
so... so we want to be, uh, liberal in our granting of aid.
The cost of that is that institutions capture
that increased federal aid by increasing tuition.
I just want to make sure you understand
that the... the for-profits...
so, if 90 percent of your revenue comes from
the government in terms of... in terms of federal aid,
then your ability to increase revenue is tied
explicitly to the supply of federal aid.
So, when federal aid goes up, you're able to increase
your tuition, you know, almost dollar for dollar
if 90 percent of your revenue is coming from federal aid.
♪
[Michael L.] When it comes to the responsibility to make smart
decisions, we put that entirely on the students.
You know, the college doesn't say
"you probably shouldn't come here
if you have to borrow the entire cost of tuition."
Um, many students are first generation college students.
You know, they don't... they don't get training in personal
finance in high school, and a loan with a 10 percent
interest rate in compounding interest and things
like that, they don't necessarily
understand the consequences of it.
[Constantine] It's a huge problem because
a lot of the students that they're targeting,
they don't have access to the best information.
They're often first generation college students.
They went to high schools where most kids don't go
to college, so they don't know the value of a degree.
They don't necessarily know what information
to look at in terms of job placements or what to major in.
And these schools, they're very good at signing
these students up, getting them to take,
uh, a government loan that's used to pay tuition.
[Michael L.] And making matters worse is the fact
that we almost indoctrinate our youth
on the importance of attending college.
Uh, a college degree is almost a necessity in American culture.
[Elizabeth] There's a way that it becomes
very easy to blame the individual when in fact
we're talking about a larger system of one,
um, instead of funding these vital public goods.
And you're then going to blame an individual
for following what they were told.
You're going to blame them for struggling
to pay something back, which is an inherently risky
and challenging financial product.
It becomes so easy to blame the individual
for a societal pressure and a structural
issue in terms of how we pay for higher education.
[Michael L.] We put college on this pedestal that
this is where you need to go.
The American dream is based on education,
and to realize that dream you need to go to college.
And what's required to go to college?
Well, if you want to go to your college,
you've got to... you've got to sign for these student loans.
So, there's almost not a decision for students.
If students are told "you have to go to college
to be successful," and they're told "the only
way you can go to college is to take out student loans,"
well, then, I've got to take out student loans.
There's not even a decision to make.
Many students enroll in for-profit colleges,
often in online degree programs, thinking
that they've found a fast track to the American dream.
[Patrick McHenry] The federal government
must become a responsible lender.
The system today is broken.
We encourage millions of students
to take on billions in debt.
Growing up, it was drilled into our heads: you've got
to go to college if you want a middle-class job.
They're not being able to buy a home or start a family.
They cannot achieve the American dream.
Borrowers who did everything right: went to school,
took on debt, got the degree.
Now they are desperately trying
to pay it back, but are derailed at every turn.
The government can garnish a borrower's
wages without judgment,
seize tax refunds, such as the Earned Income Tax Credit,
and portions of federal benefits such as Social Security.
Americans should not have to go bankrupt
pursuing higher education.
[emotional string music]
[Joe] On the one side, education, very important,
is highly correlated with your financial well-being.
Research has shown again and again that, uh,
college education is very important to the success of,
uh, young people, and especially given,
uh, the technology advancement and international
trade, the gap between those who have college education
versus those who do not is going to be bigger.
Um, so, definitely college education is important.
On the other side, uh, we have this increasing,
um, debt burden on students, right?
So, this is, uh, something we have to really balance out.
Number one reason is just the number
of college graduates is increasing by more students.
Uh, not surprisingly, we have more debt.
Number two, uh, the cost of education
is increasing, right?
So, the tuition is rising. Room and board.
Number three is more students are going to graduate school.
So, a combination of all these factors have made student
debt outstanding increasing over time.
[Ivis] And young people are told that they have
to go to university in order to be successful.
And the issue is that not only they are choosing
the best opportunity that is available to them,
because this is what their parents have told them
and this is what, you know, society expects from them,
but they get there and they might not be aware of that...
what they actually would like to do for the rest of their lives.
So, I feel that a lot of parents, and really society
as a whole are putting a lot of pressure, or,
of deciding what you want to do right away.
[Michael L.] So, when you attend college today,
there are so many potential landmines.
You might select the wrong school
and the tuition price might not be justified.
Uh, if you take out student loans,
you might pick the wrong loan that has an interest
rate that's too high, you might borrow too much,
you might pick the wrong major that doesn't lead to a job
that affords you the ability to pay off your student loans,
you might not graduate, you might change majors.
And all these possibilities, um,
are things that students don't contemplate.
Nobody goes to college thinking about
what happens if they drop out after their second year.
But it happens all the time, and a lot of people have a ton
of student debt, no degree to show for it,
and what are they supposed to do?
[indistinct] Good morning.
- Ah! - This took [indistinct]
We have friends with us today.
[girl] This took [indistinct].
Oh, no. Should we go downstairs? Whee!
Stop it.
[family grunting and giggling]
[Dane] Like that, right?
[indistinct].
It's really snowy today, so make sure
to have your jacket on, okay, Chris?
- [Chris] Yeah. - Yeah.
[chuckling]
Get that tongue in. Okay, [indistinct].
[indistinct chatting]
It's dangerous that we make this a trivial topic.
This should be at the forefront of every
discussion because the system does need to change.
[Dane] We don't talk about debt and money and how to handle
that properly with our parents or in our upbringing.
We don't talk about that in school.
Of all places, we should be taught that in school.
We only learn it by going out into the world
and hoping for the best, but certain decisions can be
catastrophic and lead to lifetime consequences.
[Michael L.] There's definitely a taboo in many homes
where it's improper to talk about money.
There's also an element of shame associated with student loans.
Um, you know, there are a lot of people
who believe "well, you signed the contract.
You have to pay for it. It's your problem, not mine."
That makes many borrowers hesitant
to bring it up, even among family members.
Why are so many people prone to dig deeper into debt, right?
Why do they feel like debt is the solution?
It comes back to lack of education,
lack of understanding how...
how much bondage debt really is.
If we were talking about it openly,
more people could avoid making bad decisions.
[Michael R.] Debt is not freedom, debt is not prosperity,
debt is not lifestyle.
Even if it's a short-term fix,
it's-it's not a long-term solution.
In fact, it's a long-term prison.
It's bondage. It's captivity.
They're not able to do a lot of things they want to do
because now they're stuck paying off debts
and they have to make extra money for that,
or they can't do other things
because all their money is going towards that.
[Isaac] I think family and friends all expect it.
Everybody's like "you know what, you're going to be in debt
with a house, you're going to be in debt with a car.
You know, you might as well be in debt
with, uh, with student loans, too."
Like, it's just a normal part of life.
[Joe] College education is a part of what we call
a social agreement, right? Social compact.
Uh, if students are, you know, our futures
educated, uh, they are better citizens.
And this is very important for us to remember.
There should be other options to get
into a career without having to basically
destroy your life at the same time.
[Joe] But this is a sort of pressure cooker,
so to speak, and everyone has to work
harder to, uh, you know, move forward.
[Isaac] I don't think it's... there's a quick solution at all.
I think everybody's got to work together to find a solution.
There's got to be some brainstorming
going on because there's got to be something
better than what... what's going on now.
[Joe] Economists would use the term Pareto Optimality.
Uh, in other words, they want to compensate,
make sure that nobody is left behind.
So, how do we accomplish that?
I think right now social policy plays
a very important role in the process.
Well, I... I think we're near 30 trillion dollars
in debt as a country right now, and, uh,
I don't see any slowing down in sight.
If nothing else, future generations are going to be
paying for this in some capacity.
Whether... whether it's forgiven or not, something has to pay
all this debt off, and it's, uh, probably going to be taxes.
[somber music]
[Donald Trump] No matter where you've been
or where you've come from, this is your time.
If you work hard, if you believe in yourself,
if you believe in America, then you can dream anything.
You can be anything.
And together we can achieve absolutely anything.
[crowd applauding]
The American dream is the chance for every person
- to improve their lot in life. - But based on the numbers,
that dream is becoming the stuff of fantasy.
[Barack Obama] The dream shared in big cities
and small towns, across races, regions and religions
that if you work hard, you can support a family.
That if you get sick there will be health care
that you can afford.
That's the essence of the American dream.
But today, for far too many Americans,
this dream is slipping away.
Americans are working harder for less.
Costs are rising, and it's not clear that
we'll leave a legacy of opportunity
to our children and our grandchildren.
But this nation was not founded solely
on the principle of citizen rights.
Equally important, though too often not discussed,
is the citizen's responsibility.
And therefore, the educated citizen has a special obligation
to encourage the pursuit of learning.
[dreamy piano music]
[Melanie] The highest A.P.R. I had
for my own federal loans was over eight percent,
and that was the one that clinched it for me that,
you know, when I sat down to do the math and realized:
I'm never going to be out of debt,
I'm going to be in debt my entire life.
And I had people explain to me how student loans work
and how you need to pay them off for years
and years and years, and I understood that,
but I was expecting to have a similar experience
to my siblings who are all ten years older than me.
They went to college and they got a job.
But that didn't happen for me.
I had, like, 800, 900 dollars a month I was
supposed to be paying in student loan payments,
and I wasn't even making that much.
I could not conceive of the amount of money.
It... it didn't seem like a huge amount to me
because I assumed I'd be making what my siblings made,
like when they started working at the same age.
I'm just now making what my sister made
as a 23-year-old in the late nineties.
[Dane] You can't have the American dream
if there's no solid economic foundation for the middle class.
Wages for the top one percent skyrocketed
160 percent since 1979, while the share of wages
for the bottom 90 percent shrunk.
This not only separates us on an economic level,
but widens the social gap from the rich to the poor
and eliminates that middle class.
[purposeful string music]
[Dane] There's been a recent poll that shows that
just over half of all of us Americans, 54 percent,
believe that the American dream is still attainable,
while 28 percent personally believe that it's unattainable,
and 9 percent reject it completely.
[Joe] American dream is inspiration
we all want to accomplish, and right now
we are really on the cusp of changes in...
at the crossroad at this point.
On the one side we have this increasing
generational divide in terms of their access
to opportunities, their income and the jobs.
Uh, on the other side, we also see the society,
um, is increasingly, um, diverse.
So, how do we deal with this new reality?
It's going to be, uh, very important for the future.
Um, so, the idea, uh, right now is
to build up a new social compact between
generations and between different racial ethnic groups.
I think only until we find a mutual, you know,
area of agreement that it will be very hard
for this society to move forward.
[woman] Student loan debt has surged to over
1.6 trillion dollars, and only two thirds of that
is expected to be paid back.
For young people, debts mean dreams delayed or destroyed.
It means families aren't formed.
[Donald Trump] The numbers are out of reality,
and certainly they make it out of reality for students
when you have to pay back those loans someday.
[Barack Obama] Helping more young people afford
college should be at the forefront
of America's agenda, and it shouldn't be
a Republican or Democratic issue.
This is an American issue.
[crowd applauding]
[woman on the news] The only avenue to prosperity
is an expensive college four year college education.
That that is one of the biggest lies
sold to young people in this country.
[man] We don't give student loan borrowers
a second chance in bankruptcy.
We let their wages be garnished.
We even let their Social Security
benefits be seized.
[man] College should be a ladder up.
To too many people, debt is the anchor
that weighs them down.
This is hurting the country badly.
We should care.
[city din]
[interviewer] An old 17-year-old family friend?
[woman] Yeah, my mom is a...
Okay. [squeals] Sit. Sit up.
[Dane] I think there's a generational change now, too.
Millennials, Gen Zs and maybe even Gen Xers
kind of don't share the same ideals as perhaps
our parents and our grandparents.
For us, really having tons of money
in our bank account isn't a satisfying life.
We're looking more for meaning and value
in the things that we do and in the lifestyle we live.
And supporting sustainable future rather than this previous
notion of American dream that was about,
in some ways, a rampant consumerism.
And I don't necessarily think that's a bad thing.
We have a... we're in a different economic state,
the world looks totally different, and I think the...
the ideals of a nation need to be updated to match that.
What's our best future?
[Michael L.] I think the American dream is that
America is the land of opportunity,
and anyone who's willing to work hard
can find opportunity
and build a better life for themselves and to build
a better life for them... for their kids.
But it's scary to think about the American dream
in the context of student loans.
This nation, this idea called America,
was and always will be a new world.
We want to see the future we can make for ourselves.
But dreams alone won't get us there.
We need to extend our horizon.
Commit to the long view.
And our mission for the future starts today.
[family chatting]
Whoa!
[woman chuckling]
All right, well...
[Isaac] For me, the American dream is... is having a house
of my own, having a dependable car, being able to travel
around the world with my wife and kids.
That to me is... is what I want, you know?
I... I... I think about it all the time.
I wake up every morning thinking about what can I do
next to be able to get my family to that point...
[crying]
[Michael R.] If you go back about 100 years, early 1900s,
about nine out of ten Americans were self-employed.
They had their own business.
They understood how to run a business and monetize it
and contribute to their community, and today,
nine out of ten Americans are employees.
It really needs to foster, uh, opportunity.
Creating more opportunity for... for young people for our next
generation so that they can accomplish,
um, what they want, and reach their American dream.
[Dane] I think that the American dream needs to change,
and is changing, and thus the way that we go about college,
go to college, and make use of the education we get
from college, needs to change as well.
- [sighing] - You know...
any parent just wants the best for their kids, you know?
♪
- [Isaac] We want them to... - [clearing throat]
We want them to be able to, you know, have a life that's...
that's happy, that's full of joy,
where they have opportunities to do what they want to do.
They have ways to grow and... and not be, uh,
stifled by the limits of not having enough funds, you know?
You only have enough money to... to pay the bills.
[Joe] I think we need to work harder
to make it even more of a reality.
I think education plays an extremely important role
to equalize, uh, equalize opportunities, and I think, uh,
college education is even more valuable,
important, for the future.
So, I think that's why I, you know,
the student debt issue is such an important concern.
♪
[Michael L.] I like to believe in the American dream.
I like to believe that in the United States,
people can build a better life than what their parents
had and build a better life for their kids.
It's scary because the American dream has almost
been weaponized to induce people into borrowing loans,
because you have to go to college if you want to live
the American dream, and if you don't go to college,
you're a failure.
And when people have that pressure on them to live
the American dream, then they're going to borrow
the student loans and they're going to make
ill-advised decisions.
And then when they're living with the consequences of that,
you can't save for the future.
You can't buy a new house.
And when you can't buy a home, which is another huge
component of the American dream, you can't build wealth
and you can't achieve what the American dream is selling.
So, I believe in the American dream, I still think it exists,
but it doesn't look what it looked like
for my grandparents, or my parents.
And in the context of student loans,
I think we owe students a lot more
than what we're giving them right now.
[Constantine] When I dream about, um, my future,
is providing a future for my children.
That they can have an even better life,
uh, than, uh, than I had.
I think college should be an educated choice
that you have thought about, that you've been taught
about the pluses and minuses of, and that decision
shouldn't involve a lifetime of debt or not.
It should involve: what do I want to do?
What will be my career? How do I want to contribute
to society?
Not: how much debt will that incur?
How fast will I pay it back?
Which job will make me the most money?
That to me is not an American dream.
That doesn't lead to a better society.
A better society is a better educated public with people
that are doing what they love to do, what they want to do,
and we're all together to make
that dream possible for everyone.
[Isaac] We're kind of in a snowball effect that I don't
know if it's going to be very easy to stop, but I feel like
if we don't figure out a way to solve this problem,
things are going to continue to get worse.
It's going to be harder
for students to... to get an education.
It's going to be harder to buy a house.
Honestly, the American dream is going to end.
It's going to end if we don't figure out a way
to... to solve this problem.
♪
[traffic din]
[keyboard clacking]
[Elizabeth] And so the book I wanted to do was a book
that actually tried to reimagine the entire story
that we told about American higher education.
And then my father fell ill.
And I, like so many women, was going to provide his care.
And I'm cleaning out his house, and I found the student
loan documents, the first one that I signed
when I was 17 years old, which is not a legal adult.
And the thing that's very difficult,
people want to think of the student loan crisis as recent.
They did not start disaggregating household debt
to include a separate category for student debt until 2003.
And then it was not until 2008 that more data was required
from schools, from bankers involved in the programs,
and it changed everything.
And that has made such an important impact.
But it meant that this entire burden
that was on people's shoulders has been lost.
And that was what I was trying to do as a historian,
saying it just doesn't make sense
that this could come out of nowhere. It just doesn't.
[Dane] To find the origins of student debt
we have to go back to the Cold War.
To 1958 and the space race to the moon.
[J.F.K.] All the eyes of the world now look into space,
to the moon, and to the planets beyond.
That only an educated and informed people
will be a free people.
The Federal Student Loan Program can really trace
its roots back to Sputnik.
Um, when Sputnik was first launched,
American legislators were very scared.
They realized: "We're going to need
smart Americans to compete.
To get smart Americans, we need to provide access
to higher education."
So, that's how the first student loans came
about way back at the beginning of the program.
Poverty must not be a bar to learning,
and learning must offer an escape from poverty.
This story that there's a small Soviet satellite
that circles the globe, and Americans are terrified,
and they pass this National Defense Education Act
to finally put federal money into higher education.
Except the first title, the first section of the bill,
was a student loan program for undergraduates.
And it really just,
I think of it as just unleashing this Pandora's box.
John F. Kennedy actually, when he was president,
hated the idea of asking stu... people to borrow
four thousand dollars for four years.
And the average annual, um, income was $5600
at the time.
And he could not imagine asking people to borrow that much.
♪
[Elizabeth] So, from 1963 to 2018, the cost of tuition
increased 1,873%,
which is an annual increase of 34%.
Meanwhile, the value of the U.S. dollar
increased 13% per year in that same time.
The cost of college education has increased
much faster than the rate of inflation.
Like, a lot faster. Like a lot, a lot faster.
[Dane] It is estimated that between 1980 and 1981,
the school year cost students the modern equivalent
of $17,410 for private college,
and $7,900 to attend a public college.
Just by 1990, this cost increased
to $26,050 and $9,800, respectively.
The student debt situation
was about to become a student debt crisis.
[Elizabeth] The Guaranteed Student Loan program.
What that title does not tell
you is the guarantee was for bankers.
The guarantee was that if a banker put out the money
for this incredibly risky financial product,
the banker would be repaid.
Not that a student would get admitted,
not that a student would finish,
not that a student would really be able to compete
with a well-paying job with equal pay.
The banker would be repaid.
Even though the lawmakers were trying to pass something that
would intentionally create a student loan industry,
cre... intentionally create a market for student debt
for them, they finally agreed to what was supposed to be,
this was my favorite part, you know what I mean by "favorite,"
it was supposed to be temporary.
It was supposed to be temporary.
And then it just... if the, um, the National Defense
Education Act opened Pandora's box a little bit,
this one just ripped it open.
And I think it is one of those great tragedies.
It makes you see a lot
of American history in a different way.
♪
[birds chirping]
[Melanie] Among all student borrowers, the amount of money
that they borrow has increased 135% since 1995.
That's before adjusting for inflation.
After adjusting for inflation, it's increased 35%.
Students, today, borrow more than one third more
of what students were borrowing in 1995.
So, students are borrowing more,
and more students are borrowing more.
♪
[Joe] Student loan debt is like a B.M.I., right?
Body mass index is imperfect measure.
So, for students who have debt, not necessarily bad,
but in general, it's not as good if they have no debt.
And it's always been a pu... puzzle to me that so many
progressives call policies like taxpayer-funded higher
education or student loan forgiveness, progressive,
because... because they're not.
Uh, what these policies are doing is they're giving
transfers to higher income individuals.
However, the most important one is whether they have a career
that leads them to productive lives.
If they are able to achieve that,
student debt can be an investment for the future.
So, bottom line is I... I don't see the amount of debt
as the sole indicator of the burden.
[Constantine] We need to think hard about the distributional
consequences of these policies.
Who benefits, and who pays?
[man in congress]...do want to see is these colleges
and universities who charge outrageous amounts of tuition
and do nothing currently to have any kind
of accountability for it.
And to me it is... it is absolutely indefensible.
[Patrick McHenry] We've saddled a generation
with unaffordable debt and an education that does
not outmatch the cost of that education.
In one survey, 60% of younger borrowers said they'd be
in their 40s before their student loans are paid off.
[impassioned string music]
[Melanie] The student debt relief solution to this,
the problem, the crisis that we have here, they have
to be very, very careful about how they do it
because it has the potential to screw over a ton of people.
It has a potential to destroy people's lives
if they don't do it right.
[Joe] I don't see, uh, you know, a total eradication
of student debt would be the best way forward.
If you just, uh, retire all the debt right now,
uh, we're going to have a new wave of a different
set of concerns over time.
[Michael L.] The danger of the blank check,
without altering college finance is you're going
to have to write another check years from now because colleges
won't have an incentive to lower their prices.
They won't have an incentive to help students find jobs
or to, um, prepare them for the workforce.
[Melanie] And not just the people who have loans
currently, but also anybody who wants
to go to college in the future.
Like we saw with... with the mid-century when the loans
started, when the federal government first started
offering loans, but then once the institutions realized that,
"Oh, we can... we can really squeeze these guys,
make a lot more money," this program that was beneficial
to students in the fifties, sixties and seventies,
it's become almost like a curse to students
in the 21st century many years later. It's a ripple effect.
♪
[Elizabeth] The model... the model for the loan program
really was the federal mortgage program.
Now, but there's two key differences:
one was the assumption that someone would pay back
their loan in ten years as opposed to 30,
because the federal mortgage is 30 years.
But the key thing about the American mortgage program
is that it has a fixed interest rate
and that it is built into the amount
that you are actually borrowing upfront, right?
That is not the case with the student loan program.
It's an important divergence that what you're borrowing,
right, is the principal of the loan.
And then what can really catch people is that Congress
will set those interest rates over time
and that you're not borrowing for the course of the loan,
but instead you're borrowing the principal
and then the interest continues to accrue.
That is why so many people can get caught
by the interest rate.
These are incredibly complex financial products,
and we're just talking about the federal loans.
Dr. Yannelis, you are recognized for five minutes.
[Constantine] The weekend before I testified
before the Senate on student loans,
I saw three people in person.
I got a... a haircut, I took an Uber to get a haircut,
and I had dinner with a friend
who had just finished Yale Law School and was clerking.
I was talking to my barber about student loans,
so he had about $15,000 of student loans.
My Uber driver didn't go to college,
he had no student debt,
I think he made much less than my, uh, barber.
Uh, my friend who had just finished Yale Law School,
he had a great corporate law job lined up.
He's going to make a lot of money over his life.
He had around $200,000 dollars in student loans.
This policy would have, uh,
benefited my friend who finished Yale Law tremendously.
My barber has a little bit student debt and an okay,
um, income, and this... this driver who was low-income
would have benefited not at all.
So, I think that's a great example just to illustrate
the regressivity of many of these policies.
You know, it's a sample size of three, but if you actually
look at the data, you see similar patterns.
[traffic din]
[Michael L.] If you look at student loans, the past couple
decades at least have been just a series of Band-Aids.
And these Band-Aids are great.
You know, some of them genuinely help people
and they make a real difference,
but the problem is they're Band-Aids.
They're not fixing the underlying problem.
I mean, college continues to get more expensive.
Student debt continues to balloon.
People continue to be impacted by it.
And we can keep putting Band-Aids on the problem,
but at some point we're going to have to address the problem,
because the Band-Aids won't work.
The thing that we also have to confront, a good middle class
job with good wages and good benefits,
that is becoming increasingly nice work if you can get it.
Real wages for working and middle class people
have stagnated since the seventies.
And at the same time that housing costs are going up,
health care costs are coming up.
So, it really is this crush on people that is hard to see
unless you step back and see the entire picture.
And I think, especially seeing it over time.
♪
[Constantine] When we say forgive student debt,
we're not really talking about canceling debt.
It doesn't, um, uh, uh, disappear.
We just mean is that we're canceling debt from current
students and moving it to future taxpayers.
[Michael L.] Forgiveness for all, I think, is an excellent solution
if it's part of a comprehensive reform
to higher education.
The government says "All right, well, we're going to write
that check, we're going to erase all the debt."
College is still really expensive.
People still have to pay for school.
And you're going to have another student loan crisis
in ten or 20 years.
Only this one's going to be worse because everybody
who is in high school now sees the debt being erased,
then they're going to borrow as much as they want
and maybe more because, "Eh, it'll, you know, I'll wait
for the next round of forgiveness."
Now, in economics they call that a moral hazard.
But forgiveness for all is maybe a necessary step
at some point, but we have to fix higher education
and higher education finance.
On the student loan issue, there's quite a bit
of low-hanging fruit of things that could be fixed,
but that take a tremendous amount of time
to be implemented, and unfortunately,
in the meantime, people suffer.
♪
And living with that debt means you've got to make
some pretty tough choices.
It might mean putting off buying a... a first home.
[woman] I teach in a place that sells education
as the path to a better, more secure life.
And I don't have a part of that life.
You'll have to wait a little bit longer
to start a family or save for retirement.
And when a big chunk of every pay check
goes towards loan debt, that's not just tough on you,
that's not just tough on middle class families.
That's not good for our economy,
because that money that could be going
into businesses, is going just to service debt.
♪
[Isaac] Now, when I first started college,
I expected to be done in five, six years,
and to be able to get into a house and...
and it's crazy looking, I mean, it's... it's 16 years
since I started college and I still don't have a house.
I still don't have a thriving business yet,
or a... or a career that's...
this amazing career that's making me a good living.
The stress of... I get from other people around me talking
about, "Well, maybe you need to go back to college,
and get a different degree."
And it's like, do I really want to go back
into that system again?
Only to be spit back out with more debt, more problems,
and the possibility that I might not have a better job.
College tuition has more than doubled since the 1980s,
and consequently, millennials have taken on
at least 300% more student debt than their parents.
Baby boomers only had to work 306 hours to pay off
their college tuition.
On the other hand, millennials today would have to work 4,459
hours at minimum wage to pay off a four-year college degree.
It takes the average person 21.1 years.
Your standard repayment plan
with a federal student loan is ten years.
And the... the 20-year plans are...
those are the income-based repayment plans.
Those are the ones where you end up paying way more
in interest, because you can't afford
to pay the large payments.
So, you end up paying more for having less money.
What is it, the boot conundrum?
Where you can buy the cheap boots every year that fall
apart or you can buy the fancy boots that will last forever,
but they're too expensive.
[Isaac] In 2008 I'd been in college for a couple years.
I was married for two years and had a brand new baby.
You know, life was great.
American Dream, we're... we're on our way.
We've almost got a house. We can see it. It's coming up.
And then, boom, the recession happens.
Let's talk about the speed
with which we are watching this market deteriorate.
This could be the most serious recession in decades.
The worst day on Wall Street since the crash of 1987.
The stock market is now down 21%.
And that means life as most Americans
know it is about to change. In some cases, dramatically.
I finished law school during the Great Recession.
Uh, it was really hard to find a job.
Seeing my student loan balance and not having a job
waiting for me at graduation was terrifying.
[Isaac] All of our dreams kind of got put on hold.
We had to kind of just focus on surviving.
So many businesses were going under,
we had people losing their houses.
And, uh, you know, but we continued
to have to pay student loans.
Those were... that was something that didn't stop.
It put a lot of frustration and stress in... in my marriage.
We didn't know what to do.
Um, that was... it was a pretty frustrating time in our life.
[Taylor] One aspect of student loans that I think is really
misunderstood is that you cannot bankrupt your way out
of, uh, student loans.
And this is different than a mortgage,
or an auto loan or a credit card.
If you default on those loans and creditors come after you,
the last resort is to declare bankruptcy
and those loans get written up.
That is not true for student loans.
They end up becoming like taxes.
So, it's really difficult to default on a student loan.
You can stop paying a student loan the same
as you can stop paying any other kind of loan,
but you can't get a discharge in bankruptcy,
unlike other types of loans.
They'll garnish your wages.
First thing they'll do is garnish your wages,
meaning you... any job you have for the rest of your life,
they'll take... they'll take their money out of it first.
They'll garnish your wages until they get it back
and however long that takes.
[impassioned string music]
They just don't allow you out of that debt.
They're going to make sure that you pay that off,
or there are families that have enough student loan debt
that, uh, if they stay
at a certain income level low enough,
they qualify for a deferral,
like, a permanent deferral on it.
And then if they start making too much money,
then they have to start making payments on it.
And so, for a lot of families that are in that
specific situation, it's not even worth going
after a higher income because now they have to start
putting all that extra income towards the debt.
So, they're working harder and not making any more money.
A deferment or forbearance, and often these terms
are used interchangeably, um,
basically what that means is you are delaying payment.
They typically come in six-month increments,
and during that six months you don't have to make a payment
on your student loans.
The danger to a deferment or a forbearance is that,
in most cases, your loan is still accruing interest
during that time.
So, let's say you're in a situation where,
"I can't afford my student loan bill."
Lender says "No problem, we can defer it for six months."
That sounds like a great solution,
but really all you're doing is you're kicking the can
down the road, and six months later,
because you didn't make any payments and interest continued
to accrue, you now have a larger balance.
And unless something happened to change your financial
circumstances during those six months,
you're right back to where you started.
[traffic din]
[Melanie] Interest will continue
to accrue the same way.
So, your debt will continue to go up even if your problem
is "I can't. It's too much. I can't pay this."
It's... "Okay, well, we'll give you debt relief,
but now you have to pay more."
It doesn't seem like the options that are available
to them really make any sense.
[Michael L.] Things eventually worked out for me,
but so many people are in so much worse situations.
I think policymakers really need to consider
what these people are going through, and we need to... to do
something so that people don't face that situation.
[Melanie] Since the eldest millennials graduated,
student loan debt has increased 362%.
Since 2006, the national student loan debt balance
has increased 248%, which is about 18% per year.
[Michael L.] As an 18-year-old who, you're about
to start college, your big concerns with student loans
are, is the college going to have the money on time?
Am I borrowing enough to meet all my living expenses?
When you're a borrower in repayment,
now you're really worried about, jeez,
how much student debt do I have? What's my interest rate?
What repayment plans are available?
How am I ever going to pay this off?
An 18-year-old, I think it's fair to say the majority
don't know to ask these questions.
As long as we put that burden on college kids
and their families, we're going to have a lot of people
who make bad decisions.
♪
[family chatting]
Okay, it's... Today is... what day is it? 15?
[child] Ten!
[children babbling]
[Dane] I'm extremely lucky, and I recognize that,
because I have parents who were able to help me qualify
for a mortgage to get this house that I'm in.
Millennials keep pushing back the personal goals
because we can't afford it.
We continue to rent because we can't afford to buy a house.
I'm making enough to pay the mortgage,
but I wasn't making enough to qualify for the mortgage.
Our jobs don't make enough money,
and we're laden with so much student debt.
[Michael L.] Student loans can have a huge impact
on your ability to get a mortgage, specifically
because they impact your debt-to-income ratio.
What the debt-to-income ratio looks at is it's how much money
you earn each month compared to how much money
you have to spend each month on your existing debt.
And if you have a huge student loan bill each month,
it's going to negatively affect your debt-to-income ratio,
and it will affect either the size of a house you can buy,
or it will mean you can't qualify for a mortgage at all.
Now, there are certain, you know, strategies that borrowers
can use to minimize the damage,
especially with federal loans.
But, you know, student loans certainly
affect your ability to buy a house.
Without my parents' help,
buying this house was not even remotely on the table.
I would have been decades working to pay off more
of my student loans in order to qualify for this house.
♪
When I look at my kids' future, I'm scared
because I'm not sure I can recommend them
to get a college education, which is absurd.
As someone who has two degrees, a bachelor's and master's,
I know the value of education.
It's absurd to me that I can't recommend that wholeheartedly
at-at this moment for my kids. I hope that will change.
[emotional music]
You know, 40 years ago when you went to college,
it didn't really matter where you were going,
what you were studying, or how much it cost.
It was a great investment.
And now, college is essential,
but it's not always a great investment.
I'd like to see that no longer be the case.
If a school costs $30,000 a year in tuition,
it better be worth it.
And right now, that's not the case.
The issue here has an immense emotional toll as well.
We're raised to believe that if we're not successful
in our career, it's completely the individual's fault,
and the system has no part to play in it whatsoever.
New generations tend to believe that success is a matter
of luck rather than a matter of actual hard work.
[Constantine] From a couple of days after my first daughter
was, uh, born, we started saving for college.
My wife always calls me a little bit neu... neurotic
with how much I save, but I... I want my children to be secure
and live in a society where everyone is secure, right?
Because we have a lot of problems now in this country,
and part of providing a secure future for my children
is making sure that we don't have destitute people.
That people are taken care of if, they're struggling.
[Michael L.] I think the redeeming aspect
of student loans is that they provide access
to higher education.
When we set about fixing the student loan crisis
and actually doing something about it,
on a fundamental level,
we can't lose sight about the one thing that student
loans still do well, and that's providing access
to higher education.
[Isaac] Any time somebody that's coming right
out of high school asks me, "Is it worth going to college?"
I have to honestly say that I don't think it is.
I have two kids, and both my wife and I have student debt.
At this point in our lives, it's a really scary thought
to think that my kids are going to go get a higher education
or a degree from a college.
I want them to know what they're getting into,
and that they have a plan with the degree that they're going
to get, because that's something
that they shouldn't take lightly.
It's a beautiful time to be in college, to get an education,
to have that community.
But it is something that does have consequences.
[Joe] I think, you know, we should try our best to make
college more affordable, or this is social responsibility
for us to do.
A lot of it comes to mentality and belief.
A lot of times people have grown up in an environment
where maybe they've been told no, you can't, that's not okay,
enough times that they just kind of fall into submission
with whatever is presented for them, right?
Whether that's just taking a job or whatever the path
of least resistance might be.
And that's why a lot of people end up deep in debt.
I think, um, a happy resolution would be a system
of higher education financing, where schools are incentivized
to put students, um, first, so that their... their revenues
are directly linked to providing value
for... for students.
[Michael R.] There... there needs to be almost kind
of a... a revolution of, uh, you know, what... what the mind
is capable of and what you can create.
It's part of why America is so great.
It's because people were free to think and go out and pursue.
I think people need to feel okay to fail,
and if they feel okay to make mistakes as... as,
uh, those stumbling blocks are just steps
towards their future success.
So, er... somebody here had a parent or grandparent
who said "Maybe I can't go to college,
but someday my son can. " " Maybe I can't start my own business,
but someday I can picture my daughter
starting her own business."
"Maybe I'm an immigrant, but I believe that
this is the country, this is the place, where no matter
who you are, no matter what you look like,
no matter where you come from, no matter what your last name
is, you can make it if you try." That's what we believe.
If the pursuit of learning is not defended
by the educated citizen, it will not be defended at all.
You will have the unequaled satisfaction of knowing
that your character and talent are contributing
to the direction and success of this free society.
For all those to whom much is given, much is required.
[motivational music]
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[emotional music]
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