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Current Affairs

A Magazine of Politics and Culture

The Incalculable Harms Imposed by Debt

Asking about the “cost” of student debt cancellation is misleading. Debt is more than just an amount in dollars; it’s experienced by people. Those living with debt suffer emotionally and physically, making the cost of not canceling crushing debt much higher than we can calculate.

Some weeks after cold weather from Winter Storm Uri had led to widespread power outages and home damage due to burst pipes in February 2021, I went back to my hometown in central Texas for a visit. On that visit, I learned that one of my family members (who asked to remain anonymous—such is the stigma of debt) had, as a 60-something, just gotten their outstanding student loan balance forgiven. They had just dealt with FEMA about reimbursement for the cost of their home repairs due to burst pipes—a process that had gone rather smoothly, to their surprise. They had spent nearly a year dealing with forms and processes and phone calls concerning the Public Service Loan Forgiveness Program (PSLF). They had consulted Reddit, where they “read about the anguish that others go through” in the process of loan forgiveness, which confirmed that they were not, in fact, crazy to have felt so frustrated with the process.

As many with loans can attest (myself included), mental anguish and suffering go on for the life of the loan, including servicing of the loan, during forgiveness or repayment program means testing, and in the process of waiting months for forgiveness or repayment (if one is lucky enough to obtain forgiveness or repayment). Reddit posters note their frustrations with and questions about payment strategies, refinancing, consolidation, loan servicing changes, and any number of confusing and maddening bureaucratic processes and stumbling blocks on their path to obtaining forgiveness or deciding whether to forbear, defer, or pay on the loan. In summing up their ordeal with PSLF, my family member told me:

It definitely impacted me emotionally—so depressing when I applied for loan forgiveness and then learned I wasn’t under the correct payment plan. Then when I accidentally learned that there was another option, I was left wondering why wasn’t I told about this? Then waiting for final approval that took four months was so stressful! It’s a horrible experience! When my loans were finally forgiven, it was bittersweet.

This family member had also been dealing with the prospect of not getting their loans forgiven due to a technicality: you have to be working full time to obtain forgiveness, and they had been on the verge of retiring. Fortunately, the forgiveness had come through just a few months before they decided to retire from work in the public sector (a decision no doubt impacted by COVID and the prospect of having to return to work in-person). At the time of the forgiveness, they had paid the principal on the loan, and then some, yet still had a balance.

Another family member who also asked to remain anonymous had this to say:

I think for me before the [loan forgiveness] program, I just accepted that I’d be paying them well into retirement, and that’s assuming I worked 25-27 years. Even now, I just don’t think about it much. I don’t want to get my hopes up. It disgusts me how much I have paid on the loan. For me, with a small monthly pension benefit, if those monthly payments went away it would be huge. I would save $450/month.

My own story with student loan debt ended in 2018, when I got the remaining balance paid off under a student loan repayment program for medical doctors working to take care of patients with Medicaid. (This program, too, was means tested, although in a less stringent way than the PSLFP. Those who weren’t working full time—which I wasn’t—obtained a pro-rated repayment. There’s an inherent judgment behind the emphasis on work: if you aren’t working a certain amount, you don’t deserve loan repayment or forgiveness.) I’d finished medical training with approximately $140,000 in debt—modest in comparison to the median debt of medical school graduates, which is $200,000 according to the Association of American Medical Colleges (the title of the article is laughable: “Ensuring Medical School Remains Affordable”). My life with student loan debt lasted about a decade, during which I accepted that I was not in a position to buy a house, a new car, or consider starting a family or a business or pursuing additional education. Seeing such a high loan balance remain largely unchanged for months at a time was sickeningly Sisyphean (as one article puts it, euphemistically: “A growing balance, even as you’re making payments, is psychologically difficult to face.”). The monthly payments were such that I felt compelled to seek out a high salary even though I knew the work was not psychologically sustainable for me in the long term. (Health care is truly facing a crisis of worker burnout, whether from COVID or other frustrations with the for-profit system that leaves so many patients under and uninsured and denies people needed care every day. It can be very corrosive to work, as a physician, as a representative of a system that is so unfair.) Now that the debt is gone, I do feel relief. In fact, being free of debt allowed me to quit my job in 2019 to regroup. In all likelihood I would never have become a staff member at this magazine had I remained in debt, as I would have been unable to afford to leave my previous job.

But I still worry about things like unforeseen medical problems, since having health insurance is no guarantee of avoiding medical bankruptcy (only the truly wealthy who can pay for their care in cash can avoid this kind of scenario), or how to pay for long-term care should either of my parents need it one day. While I don’t face harassment by debt collectors (there’s a Reddit guide for this nightmare, too) or a growing debt balance, I still live in fear of how my situation could change one day. In the richest country in the world, even those of us who have “made it” with advanced degrees know that none of us (except the independently wealthy) are really secure economically as long as everything we need for basic human survival is commodified and must be paid for with wages from labor. As Bernie Sanders has argued, “there is no freedom without economic freedom,” which includes the right to a living wage, health care, education, housing, and a secure retirement. So many of us went into education debt or other forms of debt for the chance to earn security by increasing the value of our wage potential, but this is an elusive security in a society that has devalued life itself, particularly the lives of the working class and people of color.

We often discuss what it would “cost” to cancel student debt, which tallies up to nearly $2 trillion in federal loans. But there is a heavy price to pay for continuing to leave unsustainable and crushing levels of debt in place as well, even if that cost is less able to be tallied and less talked about.

The emotional and physical suffering of people with student loan debt—or any kind of debt—may not have a calculable value. But we know the toll is quite high.

First, there’s the “violence,” to use David Graeber’s term, of the social arrangements that result in debt creation. In the case of student loan debt, the “violence” here refers to the unequal levels of knowledge and decision making capabilities between students and those who advise them to take on education debt. Many, but not all, borrowers decide—as teenagers—to take on loads of debt as advised by financial aid officers at colleges and universities. Many adolescents, particularly those who lack the social capital of college-educated parents, don’t know how to measure the risk they are taking by signing up for the debt. As Josh Mitchell, author of The Debt Trap: How Student Loans Became a National Catastrophe, said on the Current Affairs podcast:

The financial aid officers say, We’re here for you. And that’s quite misleading. And students are the least sophisticated consumers in the entire economy, right? Teenagers. Who’s more impulsive, who makes worse judgments, who has less experience with finance? Nobody. This is the group of people least qualified to make serious financial decisions.

Other kinds of debt may be taken on under outright predatory conditions, such as occurs when people of color are targeted for subprime mortgages or people are given credit card contracts that they are unable to read or interpret. These problems clearly speak to the need for a stronger Consumer Financial Protection Bureau. In the case of other kinds of debt, the underlying violence of the situation is clearer—the violence of differential legal treatment due to socioeconomic status, which then leads to people being put into situations that put them at risk of experiencing further violence. Consider cash bail, in which people end up in jail often because they’re simply too poor to post bail. As Alec Karakatsanis has written, “Only the U.S. and the Philippines allow for-profit cash bail. The rest of the world thinks it is grotesque and irrational to allow private corporations to profit by determining who is caged and who is free with their families based on how much cash they have.” And “the scientific evidence is that cash bail makes communities *less safe* by increasing instability, lost jobs, lost housing, separating kids, interrupting medical/mental health care, traumatizing people in jail, etc.”

Other forms of debt created by the carceral system are uniquely cruel. For example, the journalist Chris Hedges, who has taught in the New Jersey prison system for years, said in a recent interview on the Current Affairs podcast that prisoners have to pay for their security detail when they are escorted out of prison to attend the funeral of a loved one. “That’s why many of them don’t go [to family members’ funerals]. Suddenly they’re $1,000 or more in debt,” he said, explaining that the cost is so high because it’s considered overtime for the guard.

Joining the military—agreeing to be put in harm’s way—is one strategy people may use when they are in debt and facing an overall precarious economic situation. In her 2013 book Coming Up Short: Working-Class Adulthood in an Age of Uncertainty, sociologist Jennifer M. Silva interviewed 100 working-class people in their 20s and 30s who were “struggling to maintain the most tenuous of grips on the American Dream.” Some lived with debilitating debt. As she explained, some turned to the military as a “possible on-ramp to upward mobility”:

By promising a steady paycheck, medical benefits, a daily routine, free college tuition, and even drill sergeants who would talk to them about their futures, the military appealed to young men and women as a beacon of security and choice in a storm of risk.Of course, the military also entails a different sort of risk—of physical injury, trauma, and death, especially during times of war.

As Silva explains, the military was hardly a “guarantee of upward mobility” considering that many recruits returned from Iraq with PTSD, “lingering injuries, and guilt over having survived.” Silva concludes: “Only two of the seven military women in my sample used the social capital derived from their military experience to attain stable jobs.” Overall, only five of her twenty interviewees who had some military experience were able to “exchange” their “veteran status for secure civilian careers.” And yet:

the dreaded alternative of dead-end, precarious service jobs prompts continual reenlistment because informants were convinced that just one more term would allow them to save up enough to pay off their debt or finally find the time to go to college.

In this way, debt (combined with lack of free college and lack of living-wage jobs) plays an important role in pushing people to make choices that could lead them to trauma or death.

Secondly, there’s the psychological “violence” of how debt makes people feel. To quote Mitchell again, about student debt:

I think shame is probably the number one word to describe how a lot of borrowers feel when they see how much they owe, and they’re trying really hard to pay it back. They feel like they did everything they were supposed to do. And they end up not being able to stay on top of their loans. Every single borrower I talked to was very ashamed of it, and they didn’t quite know why. They felt like the system was very opaque.

Graeber, who wrote about the “spiritual violence” or psychological distress of what he called “bullshit jobs”—those in which the worker felt their work was either not actually useful to society or could even be actively harmful to society—made a related observation in Debt: The First 5,000 Years. Getting at the negative psychology, or “violence” underlying the concept of debt, he wrote:

If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt—above all, because it immediately makes it seem that it’s the victim who’s doing something wrong.

Besides shame and a sense of wrongdoing, people with debt suffer a variety of mental and physical consequences from the circumstances around the debt. The American Public Health Association (APHA) in 2021 released a policy statement noting that household debt is rising. They noted that 70% of college graduates hold student loan debt, 40% of Americans hold credit card debt, 20% of Americans report not being able to pay medical bills, and increasing numbers of people (disproportionately the poor and people of color) rely on predatory financial products—in the form of payday loans, pawn shops, or other services—an industry which has grown since the 1990s.

Furthermore, debt “increasingly threatens the public’s health,” causing adverse effects such as “stress, anxiety, depression, and high blood pressure.” Other research has found debt to be a “socioeconomic determinant of health,” in part because people may skip needed medical care, housing payments, or other needed consumer products (including utilities and/or food) due to financial hardship. Chronic stress itself is bad for overall health. One WebMD article lists “financial anxiety” as a condition in which people worry about money issues like debt or losing one’s job or paying bills. “Financial anxiety” seems to be putting it lightly: there was a connection between suicide and housing troubles (foreclosure or eviction) in the Great Recession, and recent surveys find that those with student debt experience mental health distress from the debt.

We could try to calculate the “cost” in dollars of the physical and emotional distress people experience due to student loan debt or other debt. We could try to balance this with the “cost” of canceling the student or other debt. But do we need to?

Now, I support full cancellation of student debt—and you should, too, because the case is solid. Substantial numbers of Americans also support some degree of student debt cancellation. But arguments around student debt cancellation often focus on the numbers. How much debt? And for whom and at what income levels? As Sparky Abraham has explained, there are generally four kinds of justification given for student debt cancellation: justice, harm reduction, redistribution, and economic growth. Even the “harm reduction” scenario—which considers the kind of potentially incalculable harms we’ve been discussing, such as “the psychological weight of a debt burden around your neck”—involves, he observes, considerations of worthiness and income levels by profession.

But as Abraham explains in this video clip, the “cost” of student debt cancellation is really unknown. The overall cost is not simply the total amount of the outstanding balances of every borrower (because many people are not paying on the loan, will have the loan discharged upon death, will have the loan forgiven, and so forth). The cost, he explains, “might surprise you.”

We’ve discovered that forgiving student loans might be cheaper than people think, because so many people are on track to be in debt for decades or until they die with no escape. Debt makes it harder to find housing, harder to get a job, harder to get insurance, harder to stay married, harder to stay healthy, harder to have any kind of stability in your life. If many student borrowers will get loan forgiveness when they die, that means by not forgiving their debt now, we are condemning people to live in miserable debt for little or nothing. We will extract very little from them, and they will suffer immensely. Debt forgiveness in many cases means that the federal government gives up nothing while many people enjoy a much better life.

The point is twofold: “cost” is an illusory number. Beyond that, we can end the harms of this debt now by canceling the student debt.

Every day, across the country, people struggle under all kinds of unjust, unnecessary debts that have been created by policy choices.

In Debt, Graeber argued that “we are long overdue for some kind of Biblical-style Jubilee” for “international debt and consumer debt.” (For a look at the financial violence inflicted upon poor countries by the IMF and the World Bank, see this excellent piece by economist Rob Larson.) It would relieve suffering and “show us that paying one’s debts is not the essence of morality, that all these things are human arrangements and that if democracy is to mean anything, it is the ability to all agree to arrange things in a different way.”

We don’t have to do debt this way. We can, as Graeber wrote, “wipe the slate clean … and start again.” We can improve the health and well-being of millions of people by canceling student debt, making college free, and beginning to question debt altogether.

Ultimately, as Abraham has pointed out, if we can cancel one form of debt, why not others? “Student debt is a big weakness. It hasn’t been surrounded by legal and political barriers in the same way that other debt has. It’s vulnerable. That vulnerability allows us to see that other debt is vulnerable, too.”

Why should anyone have to take on debt to obtain basic human necessities? I agree with the Debt Collective, which calls for debt abolition so that “no one has to take on debt to survive.” Debt abolition should be part of a larger project to create a society that uplifts people, not one that burdens them with the distress of debts that many will never be able to pay off and that the president could, with his executive authority, cancel today.

Thank you to Sparky Abraham for his advocacy on student debt cancellation and for giving me the idea to write this piece.

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