The student debt crisis is a racial justice issue depriving Black and Brown Americans important social and economic mobility.

In August of this year, President Biden followed through on a campaign promise to help debt-drowning college students pay off their loans. He announced a loan forgiveness program acknowledging that the total cost of both four-year public and private college has nearly tripled over the last 40 years…and that’s after accounting for inflation.

A variety of court cases have been brought against Biden’s plan blocking the U.S. Department of Education from moving forward. Just last week, the Supreme Court agreed to weigh in on one of them — Nebraska v. Biden, that will determine whether or not the Biden administration overstepped its authority in using the HEROS Act — an act that allows the administration to change payments on student loans during times of national emergency — to cancel up to $20,000 in student loan debt for nearly 40 million Americans. The oral arguments are set for February. Thankfully while this issue pends in court, the administration extended a pause on federal student loan payments so that borrowers are protected.

At the ACLU, we believe the student debt crisis is a racial justice issue depriving Black and Brown Americans important social and economic mobility.

Here to discuss how we got here, the litigation at hand, and why this issue is one of racial justice and systemic equality is Persis Yu. She is the Deputy Executive Director and Managing Counsel at the Student Borrower Protection Center, a group leading the charge in advocating for forgiveness.

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KENDALL CIESEMIER
From the ACLU, this is At Liberty. I’m Kendall Ciesemier, your host.

In August of this year, President Biden followed through on a campaign promise to help debt-drowning college students pay off their loans. He announced a loan forgiveness program acknowledging that the total cost of both four-year public and private college has nearly tripled over the last 40 years…and that’s after accounting for inflation.

A variety of court cases have been brought against Biden’s plan blocking the U.S. Department of Education from moving forward. Just last week, the Supreme Court agreed to weigh in on one of them — Nebraska v. Biden, that will determine whether or not the Biden administration overstepped its authority in using the HEROS Act — an act that allows the administration to change payments on student loans during times of national emergency — to cancel up to $20,000 in student loan debt for nearly 40 million Americans. The oral arguments are set for February. Thankfully while this issue pends in court, the administration extended a pause on federal student loan payments so that borrowers are protected.

At the ACLU, we believe the student debt crisis is a racial justice issue depriving Black and Brown Americans important social and economic mobility.

Here to discuss how we got here, the litigation at hand, and why this issue is one of racial justice and systemic equality is Persis Yu. She is the Deputy Executive Director and Managing Counsel at the Student Borrower Protection Center, a group leading the charge in advocating for forgiveness.

Persis, welcome to At Liberty!

PERSIS YU [00:02:01] Thank you. It’s great to be here.

KENDALL [00:02:02] So Persis, we’ll just start with the news, the Supreme Court has decided to weigh in on whether or not the Biden administration has overstepped its authority with its plan to wipe out billions of dollars in student debt. They’ll hear the case of Nebraska v. Biden in February. Why do you think the justices decided to take up the case? And what kind of outcome are we hoping for or expecting based on previous discourse?

PERSIS [00:02:27] I think it’s important to think about how we got here, right. There were a number of cases and initially most of the cases were dismissed. The way that we got to the case here is that there are six states who have sued the president over the debt relief plan. And, in fact, at the district court level, the states lost and the the administration prevailed. The judge, who is not a leftist judge, who is a Republican-appointed judge, dismissed the case because he said that none of these states had standing to bring the case. They, of course, then appealed to the Eighth Circuit, which then did, without going through any of the like, normal merits decisions issued an emergency stay. And then that stay was then later upheld with a little bit more analysis, but still not going through the full analysis. So the administration has asked the Supreme Court to take up this issue. Obviously, this is a very politically charged issue, and I can’t speak for Justice Kavanaugh or the rest of the bench as to like why they took it up but certainly it was at the administration’s request. The states also seconded that request in their response. But the reason why DOJ is asking for the Supreme Court to weigh in here is because they feel very confident on the legality of the program. And so they are appealing to the Supreme Court to really follow the rule of law here. Obviously, we all know that there is a larger context of which, you know, whether or not the courts are going to follow the law as as we understand it. But I think, you know, if we are to look at this in kind of like the way that that folks have historically looked at issues of standing and the application of the president’s authority, they are very confident on it. I agree. I think that the debt cancelation program is legal under the HEROS Act, which is the law that they used to implement it. So hopefully we will see a favorable decision there.

KENDALL [00:04:24] And to be clear, you know, this is all based off of the program that the Biden administration announced that was in response to the pandemic, called the Higher Education Relief Opportunities for Students Act of 2003, which allows the federal government to make changes to student loan programs to respond to national emergencies.

PERSIS [00:04:47] The HEROS Act. You know, it gives the Secretary of Education wide latitude to ensure that student loan borrowers are not negatively financially impacted by these national emergencies. And so there was there was a lot of analysis that a lot of folks have done. I mean, there is obviously a much broader like student loan context in which this national agency kind of overlays on top of it was like a crisis on top of a crisis. Right. And so there are these factors right, as you mentioned before, that this is a racial justice issue. Right. People of color take on more debt. Low income people take on more debt. It’s an economic justice issue. It’s a gender justice issue. Women take on more debt than men. And and incidentally, like we have this pandemic that has I mean, probably not coincidentally, also most greatly negatively impacted those same populations. Yes. And so you have this crisis on top of a crisis, and then you have the HEROS Act, which says the secretary has authority to to take steps to make sure that folks are not negatively impacted by these national emergencies. And so this is the step that they’ve taken, because what they know in similar kinds of I mean, there is nothing similar, right. But like in smaller versions, we know that like where they’ve paused payments because of hurricanes, for example, or wildfires, we know that when they’ve paused payments for those impacted populations, delinquency and default rates typically spike upon returning to repayment. And so if the student loan system is ever to return to its normal operation, the secretary decided that he needed to take steps and the president obviously as well to make sure to mitigate kind of that that traumatic experience of returning to repayment after being off for this for so many years.

KENDALL [00:06:41] And to be clear, this was a huge issue prior to, as you said, a crisis on top of a crisis prior to COVID becoming what it has become. I’m wondering, do you think that the criticism is coming from the fact that the Biden administration has used a law in emergency times to respond to a crisis that kind of already preexisted before COVID?

PERSIS [00:07:07] So that is one of the criticisms that is being raised in these lawsuits. It is a critique, right. Of of the the authority. And I think I mean, I think one of the things to think about it is there can be multiple reasons why you do a thing. Right. Like the HEROS Act does not say that the only good reason like this must be the only good reason to take this action. Right. But the HEROS Act is pretty clear that like that the secretary should take action to make sure that folks are not put in a worse financial situation. And I think student loan borrowers have been painted by by folks who are opposing this policy, as, you know, wealthy, you know, people who went to Harvard, you know, like doctors and lawyers. And the fact of the matter is, is that’s like not an accurate description of who takes on student loan debt. Right. The vast majority of folks and the data that the administration put forward in these cases to as their justification shows that, in fact, the vast majority of the people who will get this relief are people who make less than $75,000 a year. Right. We know that 40% of female borrowers did not complete their degree. Right. This is a huge issue. It is a preexisting issue, but it is a huge issue within this population who was affected both by certain loans and then again by the pandemic. And I think this absolutely is a critical step if you are to want to make sure that student loan borrowers are not harmed financially by the pandemic.

KENDALL [00:08:36] Thank you for that. I wanted to get that part of the conversation a little bit out of the way and at the beginning, because that’s the news. That’s what we’ve just heard, that the Supreme Court is going to take up this case. But this is a behemoth problem and it didn’t just come from nothing. It seems that there are some markers in history that could have that pointed to the rising cost of college during the Reagan era, higher education funding and student aid were cut following the Great Recession of 2008. Federal and state governments made deeper cuts to higher education funding. Then we put the pandemic on top, and then we have the rise of inflation. People are struggling now more than ever, as we’ve just discussed. Where did we go wrong in this? How did we kind of let this crisis become a crisis?

PERSIS [00:09:33] That is a really good question. And I think, you know, I mean, I. There is a lot of components to that. But I do think fundamentally coming back to the idea…the kernel is like when did we decide that we were going to fund higher education through personal debt? Right. And I think that that is really like in terms of, you know, pivotal policy decisions. I mean, there were many. Right. And like and throughout history, I think it’s interesting when people say that, like, oh, it’s not the pandemic, it’s the crisis. Well, it’s like it’s it all snowballs. There have been attempts throughout the decades. Right. This is of course not. This is not a choice that was made last year. It was made decades ago. And then over and over and over again. But there have been attempts to implement free college to increase the amount of state funding, federal funding for education. And there has been there has been resistance in many places to that. I was just reading about, you know, how how threatened a lot of folks felt when when the CUNY system was offering free tuition across the board.

KENDALL [00:10:44] And the CUNY system, just for people listening who may not know, is the city of New York’s higher education public system.

PERSIS [00:10:52] There’s a very complicated history about how we finance education, and especially as we are talking about, you know, this relates back to the conversation about education as a civil rights issue and who who has to take on debt. Right. And then there’s a large analysis about the fact that when we had free college, that a lot of low income folks, a lot of women and a lot of people of color were able to take advantage of these systems.

KENDALL [00:11:19] Well and education, largely in our system, has been kind of, you know, in the pull yourself up by the bootstraps kind of ideology that is very American, education has been largely touted as the way to do that. The mechanism of action for people who want to better themselves and better their life.

PERSIS [00:11:41] Education is the is supposed to be the great social equalizer.

KENDALL [00:11:45] Exactly. Exactly.

PERSIS [00:11:46] And then we put this really heavy price tag on that. And so I think that there has been this this countermovement, like as there’s been a movement towards like greater access, greater civil rights, period. Right. One of the things that has been fascinating to me throughout this entire debate about student debt cancelation is this idea of, “Oh, we can’t do this. We couldn’t possibly cancel student debt because it would be regressive.” You know, which is, I think is both factually false because again, talking about the population of student loan borrowers is not actually who we think, who the collective we think that it is. But also, I think it’s a fascinating discourse because student debt is itself regressive. Right. If you do not have the money to go to school, you have to take on this debt, which, you know, most of it starts accruing interest immediately. So the more that you need to borrow, the more you’re going to pay back in interest. And then because of the way that our society is set up, you know, women, people of color, low income folks have to take on more debt. And then also, they make lower wages. And so then they struggle to pay it off. And especially if you don’t complete your degree. Right, you don’t even get the benefit, the supposed economic boost of having that education. Right. And so then you really are like upping the stakes of like attempting to engage in social mobility. Right. So you you attempt to engage in social mobility. You have to take on this expensive loan. The poorer you are, the more that loan is going to cost you over the life of the time. And if you don’t succeed and this is what I think the piece where it really gets regressive is if you don’t succeed in any one of these places, right? You don’t finish your degree or the degree doesn’t get you the wages that you need in order to actually live and pay off your student loans. You’re then put in default and then we strip you of your safety net, right? The government will take wages. The government will take the earned income tax credit, which has always blown my mind. Right. Like one of the most effective anti-poverty measures that we have will be taken if you default on your federal student loans. Right. Like if you if you can’t pay it off in your working lifetime and you are on Social Security retirement, your Social Security benefits can be garnished. Right. So it is extraordinarily expensive and the stakes are extraordinarily high and it is super regressive. Right. It means that the people who need the social mobility the most are going to pay the most for it and are going to be harmed the most if things don’t all go perfectly.

KENDALL [00:14:23] Yeah. And gosh. And when you say it like that, I mean, I think it’s the promise of opportunity. But then if so many things can interrupt someone’s college education experience, so many things can interrupt someone’s ability to get a job, that is going to pay them enough to pay back their student loans. And all of these things are more likely to impact you if you are of a marginalized identity group already. So it’s like you’ve just got stacks and stacks and stacks against you. And I think it’s really important to talk about that because I think some of the narratives out there are, well, you’re stupid for taking on student loan debt. Right, right. You at 18 are stupid for making that decision. You should have gone to a college that you could afford. You should have done something better for yourself. And I always find that to be so unfair, especially as someone of the millennial generation who has largely been, you know, saddled with this kind of crisis. You know, I remember being in high school and having everyone say college, everyone has to go to college. Right? Like so I don’t know. I just always like to push back on that idea that that this is something that is an issue of personal responsibility. It’s not an issue of personal responsibility. And well, let’s just be clear. This is impacting millions of people. 44 million Americans collectively hold over $1.6 trillion in student debt. And that is you cannot pin that on a singular group of people doing something wrong. Right.

PERSIS [00:16:10] That’s totally right. I mean, to your point, you’re damned if you do and damned if you don’t when it comes to education, because if you didn’t go to school and then you don’t make a living wage or you don’t are able to support your family, well, that’s your fault because you didn’t go to school. And what were you thinking? Right. Because don’t you know that an education is your pathway to a to a better future? Right. But if you do, you know, the vast majority of people don’t have a choice. You can’t work your way through college anymore. And so for most people, the choice is, do I go to school and take out a loan or do I not? Or do I just knock out an education and not try? And so I think that’s like the crux here. The other piece that you alluded to is really the the impact of familial wealth, right?

KENDALL [00:16:56] Right, cause I can imagine some people listening to this thinking, what is the ACLU? This is a civil rights organization, civil liberties organization, what does this have to do with student debt? But the right to access education, and then, we see it as a racial justice issue. I mean, the intergenerational wealth piece is so important. And I think that the numbers are really striking. The average Black household has about 1/13th the wealth of the average white household. And we have talked about this in other conversations. We had an episode about racial reparations in California and the effort to move that along, and the disparity for the average household is just so striking when you see it on paper. It’s not just what you’re currently making today. It’s what did your family start with? What does your family have? What does your family pass on to you because money, money grows. And if you don’t have any money to grow, your money won’t grow. And that’s how we get these vast, vast disparities. Can you explain the effects that this program that’s been positioned by the Biden administration would have on building back intergenerational wealth for these families? What would people be able to do with this money as opposed to just paying off their loans? And how could this affect future generations?

PERSIS [00:18:21] Right. So I think this is such an important question to answer because what we know is that student debt cancellation disproportionately will benefit Black and Latinx borrowers. A disproportionate number of these borrowers will see total cancellation. And we know that, you know, I think total cancellation is important because there is not just the financial burden of debt, but there is an emotional burden of debt. We know that people without debt are more likely to start businesses, you know, are more likely to take control of their other finances. We do know that not just do you know Black and Brown borrowers hold more debt, but we know that it negatively impacts them to a greater degree. Black and Brown borrowers default at a significantly higher rate than their peers. It takes them significantly longer to pay off their loans. I mean, one of the most striking statistics that was the result of a Brandeis study found that looking 20 years out after a borrower took out their loans, you know, the typical Black borrower still owes over 90% of their original balance, whereas the typical white borrower will have paid off 90% of their balance in that 20 year period. Like we know that just the long term effects of this debt have on borrowers. Again, the debt, statistically speaking, you know, people with student debt are less likely to become homeowners. They’re less likely to save for retirement. So this is not just what is your finances right now? What are your finances going to be in 20, 30, 40 years?

KENDALL [00:20:01] I also think that’s important to note just because, you know, I can hear the voices of opposition. Right. Well, this is a lot of government money. The government is going to be spending money on this, whether it’s at the beginning, at the seed of this problem or in the tentacles of this problem in people not being able to pay their house payments and people not being able to afford health care. All of these different things, we’ll see impacts of this crisis down the line in a variety of other ways that we will be paying for. So to me, it’s about allocating those same resources that we would spend on the impacts of the problem to actually try to solve the problem before it gets to a point where we’re seeing really detrimental impacts in people’s lives.

PERSIS [00:20:58] So we did a fair amount of polling and around the cancellation issue. And of course, you know, cancellation is very popular among student loan borrowers, but it is also popular among people who do not have student loan debt, who never took on student loan debt, who paid off their student loans. And this is me just hypothesizing here. But student loan debt doesn’t just impact the borrower. I think that’s a very individualistic way to look at it, but it impacts entire communities. The intergenerational finances work in both directions. And, you know, I’ve talked to many borrowers of color who struggle while their salaries may be, you know, they may have decent, you know, quote unquote decent salaries, but they’re also helping pay for their brothers and their sisters to go to college. They’re helping out with their parents’ finances. One of the groups, realtors, were on board with student debt cancellation because our communities are stronger when people can afford to buy homes. Right. When families can afford these, you know, to buy homes, to build businesses, when seniors are able to, like, afford to retire. Communities are actually better and stronger for that. And communities of color in particular will be stronger if borrowers are not saddled with this debt.

KENDALL [00:22:11] Yeah. I mean, you make a compelling case. It sounds like you do this for a living.

PERSIS [00:22:17] Right? It sounds like I’ve thought about this.

KENDALL [00:22:19] It sounds like you’ve thought about it. It sounds like you have. We know and we’ve talked a lot about on the podcast all of the ways in which Black Americans have been economically subjugated for centuries and blocked from building wealth, whether that’s the lack of access to a bank account so we are advocates of postal banking, whether that’s a lack of access to technology these days, so we’re advocating for broadband expansion. Could you take us a little back in history and help us understand a little bit more about the ways in which we’ve blocked Black Americans from building wealth and how this could begin to chip away at some of this problem?

PERSIS [00:23:10] So I think going back, I mean, going back to the question of how did we get here and thinking about, you know, the Higher Education Act was passed as part of the package of civil rights bills. Right. You know, this was one of the sixties bills designed for access. And there was, again, the decision point, do we provide grants? Do we make college free or do we finance this through debt? And there’s an analysis where debt is actually a mechanism of social control. Right. And so, you control people with debt. It is not accidental that it is hard. Right. You have to take on debt to get social mobility, which then drains your social mobility. I mean, there’s some fascinating overlays that sociologists have looked at in terms of where these decision points have been made with respect to movement building during the Vietnam War, where folks were, you know, there’s a lot of activism on college campuses. And then you have an increase in tuition and increase in debt rates, and you see this decrease. And so there is a fascinating analysis to be done. And I’m a lawyer, not a sociologist, but there’s a fascinating analysis to be done about how debt has been used to actually thwart the development of assets, to thwart, you know, social movements, to thwart the social mobility of the people for whom it is purportedly supposed to, you know, provide this educational benefit for.

KENDALL [00:24:39] Oh, it makes me so mad, you know? And I think that what’s so important about talking about this and really picking it apart is that I think we talk about things from a headline perspective, right? We hear student loan debt will be canceled by the Biden administration. And, you know, people have these gut reactions from that. Right. But when you actually peel it all apart and you realize that all the things, all the little ways that people have been, that this has been building into really a robust movement to deny people economic mobility, I just have to believe that if people actually really understood the problem, that favorability would be even higher than it is on this issue. So Nebraska versus Biden, which is the case with the coalition of Republican led states suing to block the Biden administration’s student loan forgiveness plan. That’s set to be heard in February. I know that the Biden administration extended the moratorium on payments, so that’s good. But, you know, there’s a lot of people watching this case and a lot of people who are really, you know, were so relieved by seeing this program be announced. What would you want to tell people about what you think of the state of things right now from your perspective, as someone who is deeply embedded in this conversation and is really doing their best to advocate for them?

PERSIS [00:26:18] So I think to start with, the student debt cancellation program is grounded in the law. It’s a legal program, and there are multiple pathways that the administration could have legally chosen to get where they ultimately landed. And so we have the law on our side. Now, does that mean we had the Supreme Court on our side, unfortunately, is not necessarily the exact same question. I think it’s worth taking a step back and understanding what really is happening here. And I think borrowers should be angry, frankly, right, that they are being used as political pawns in this larger political debate. You know, the six states, I think one of the things that’s important to recognize, right, is that these six states, they are arguing that they have standing, that they are harmed and that their citizens are harmed. They are representatives of their states and they are saying that their states are harmed because there might possibly be some tax revenue that they could get off of student loan borrowers who get cancellation in the future or they’re harmed in a couple of cases, Arkansas in particular, because they have a state lender who might lose a little bit of money. And frankly, that is actually really questionable whether they even would lose money or not. But in comparison to the billions of dollars that these states, you know, that the residents of these states could receive. Right. Like these are, you know, arguing that somehow the harm of a private company, Mohela, is then going to bring more harm to the state than the, again, billions of dollars that the actual residents of Missouri would receive under this debt relief plan. I think borrowers should be angry. Borrowers in those states should be angry. This is a vital program, and these borrowers deserve to be treated better than political pawns, and they need this relief because everyday finances of 44 million people depend on this program.

KENDALL [00:28:14] Right. And if you imagine those residents having some more economic freedom, what that benefit could be to their state.

PERSIS [00:28:23] Absolutely right. The comparison about the portfolio of the Arkansas program is tiny, a fraction of the entire portfolio of the Arkansas health program, is a fraction of the billions of dollars that Arkansas itself would receive in debt cancellation. So if you scratch the surface of these lawsuits, they really don’t hold water. The case in Texas, you know, these are two borrowers who are excluded from relief. Right. And so they are arguing that they are bringing this lawsuit because they were excluded and that they should have been able to come in to be included. Well, okay. Let’s set aside whether or not the law actually requires that. Why is the remedy for your supposed harm to then eliminate the program for everybody else? Right. It’s not rational. It’s not logical. And so when you just scratch the surface of any of these cases, they are all brought in bad faith and they are brought with the political motive of damaging this administration. And I think, you know, I think that the tens of millions of borrowers whose finances depend on this deserve to be treated better than that.

KENDALL [00:29:36] One last question before we let you go. What kind of systemic movements beyond this bill, beyond this act by the Biden administration, do we need to be advocating to prevent this kind of crisis from bubbling up again or to be better advocates for borrowers, to decrease the cost of college? What can we do as just individual lay people who care about this issue and want to make it better?

PERSIS [00:30:12] Yeah. So I think we’ve talked about how many people this debt relief program will benefit and how it will help millions of people build wealth. But I think it’s also important to remember the millions of people who will still hold large amounts of student loan debt after this relief is given. And so we need absolutely, this is this is a critical thing that needs to happen right now. But it is not the solution to the student loan crisis. There is a lot more work that needs to be done to both have a pathway for the 20 million people who will still hold student loan debt to be able to get out of debt. And then, yes, we need to really question this fundamental right, this fundamental, pivotal question of do we finance higher education with debt and how do we expect people to pay for education? And so how do we provide folks with that access to social mobility that is not based upon debt? And I think that is both critical on how we prevent this from happening in the future. And we must never forget the 20 million people who will still hold student loan debt at the end of this relief program.

KENDALL [00:31:24] That’s great. I think we have our marching orders. Persis, thank you so much for joining today, for helping us make sense of this big issue that I think we often don’t really get to dive deep into and for helping our listeners understand what’s at stake come February with this big case and and more broadly, what’s at stake for the future of student borrowers. So we really appreciate having you. And thank you so much for your work.

PERSIS [00:31:57] Thank you for having me.

KENDALL [00:32:01] Thanks so much for listening. If you enjoyed this episode of At Liberty, please subscribe wherever you get your podcasts and rate and review the show. We really appreciate the feedback. Until next week, stay kind.