Student Loans and the Next Populist Political Revolution
Posted By Derek Johnson on November 14, 2016 at 11:48 am
For many reasons, the election of Donald Trump this past week sent shockwaves through the political system. While the dust continues to clear, most Americans have now shifted their thoughts to just what happened and why, wrapping their heads around “President Trump” and trying to determine what his ascendancy and populist platform mean for the country.
Primarily, Trump’s election marks the rise of economic populism as a potent force in American politics and the rejection of a status quo that many voters deem responsible for terrorism and the Iraq War, the Great Recession and a range of other issues. During the past 16 years, the electorate wildly seesawed between Republicans and Democrats, apparently fed up with the status quo and willing to hand power to whichever party promised to shake it up more. But each time, the ascendant party eschewed dramatic changes in favor of incremental reforms.
Trump ran totally and completely against a two-party system that was just as unpopular with the public as he was. Trade deals crafted by both parties for the benefit of wealthy donors became the weapon he wielded to bludgeon his opponents into submission. He railed against the Trans Pacific Partnership, a trade deal crafted by the Obama administration and supported by majorities of Democratic and Republican politicians. The very institutions that failed to prevent Trump’s ascension were themselves on trial the entire election, and they didn’t know it.
A populist take on student loan debt
In the final weeks of his campaign, Trump did something strange. After a year and a half of ignoring higher education issues, he gave an impassioned speech about student loans, calling the situation a crisis. He spoke about the harmful effects that high debt totals were having on the lives of millions of college students and their families, while acknowledging that a college education is still a vital stepping stone to success in the modern economy.
Then he proposed an ambitious, though vague, overhaul of the student loan system that included tying all loan payments to 12.5 percent of a graduate’s income followed by total loan forgiveness after 15 years. It was completely out of step with traditional Republican thinking on the issue and looked at the time like the flailing of a desperate campaign. Student loans probably did not affect the election outcome, but Trump’s shift presaged the populist strain of thinking that ultimately won him the election. In his speech, Trump remarked that in talking to people at his many rallies, student loans was one of the most frequently mentioned problems in their lives.
Of course, Donald Trump was not the only presidential candidate who made student loans and college affordability a focus. Bernie Sanders kicked off his campaign in May 2015 by calling the economy “rigged,” opposing past and present trade deals and delivering a simple and direct message that wound up mirroring the mood of the electorate that put Trump into power:
“Brothers and sisters, now is not the time for thinking small. Now is not the time for the same-old, same-old establishment politics and stale inside the Beltway ideas,”
Then he proposed one of his big, radical ideas to transform the nation’s workforce. If a college education today is what a high school education used to be (not a luxury but a bare necessity and a vital first step for financial success and security), then why do we make our young workforce pay tens of thousands of dollars to get it? “It is insane, it is counterproductive to the best interests of our country that hundreds of thousands of bright young people cannot afford to go to college and that millions of others leave school with a mountain of debt that burdens them for decades.”
Even Clinton embraced student loan debt populism
Thus, “tuition-free” college entered the American political lexicon. Eventual Democratic nominee Hillary Clinton rolled out her own version of “debt-free” college, but it was narrower in scope and relied on convoluted logic that muddled its overall message. Clinton eventually wound up scrapping that plan and adopting Sanders tuition-free plan for those making $125,000 or less.
Much like the issue of trade, the idea cut across party lines and resonated with millions who had direct experience with the current costs of college. Public polling showed that the idea was truly populist: It garnered majorities or pluralities of support for all age groups under 55. Meanwhile, most over 55 opposed the idea. Even among self-identified Republicans, 23 percent of respondents thought debt-free college made sense.
For decades, politicians in Washington mouthed platitudes about the rising costs of college while mostly proposing to fix the problem by expanding access to federal student aid. This helped increase college access but did nothing to address the costs, which steadily went up, or assure that every college accepting federal aid was providing demonstrable quality. Worse, higher education became a breeding ground for poor-performing nonprofit and for-profit schools that cared less about educating students or elevating their status in academia and more about enrolling as many recipients of Title IV funding as humanly possible.
As cumulative student debt became the second highest form of debt held by Americans, policymakers shifted to strategy of debt management, pushing limited debt-forgiveness and then income-driven repayment. But ultimately these moves represented Band-aids, slight tweaks to a system of funding higher education that is more an accident of history than a well-thought-out comprehensive policy. Politicians including President Obama wound up touting lower monthly debt payments (with higher debt totals and longer repayment periods) as an acceptable “new normal” while ignoring the negative effects that student debt has on a generation’s ability to build wealth and savings during prime earning years.
It was a classic example of Sanders’ comment about “stale inside the Beltway” ideas “thinking small” about problems that require big solutions. There is growing evidence that the public no longer views the tradeoffs involved in paying for college in the same positive, sunny light as the political class.
In the course of 18 months, the concept of free college went from an absurd populist notion that nobody took seriously to the official policy of the Democratic Party. With Democrats now in the wilderness after having lost all three branches of government, many are re-evaluating Sanders’ style populism and its role in the Democratic Party. Certainly it appears that a big shift on trade is coming, though it will likely entail a nasty fight with party insiders who are still very much pro-free traders.
Trump’s populist platform and the future
It’s unclear whether Trump actually plans to propose the student loan idea he discussed several weeks ago. He hasn’t brought it up, and it is not among the items listed in his 100-day plan, though promoting more career and technical training programs is. Tuition-free college likely is off the table, as Trump adviser Sam Clovis called the idea “absurd” and overly costly this past May.
Democrats may choose to keep the idea. It represents a big enough change to the system for them to consider running on it as a “big bold solution” to the student debt crisis for the next few election cycles. But a Clinton loss also opens the door for revisiting the concept of other bold or radical policy prescriptions. More expansive debt forgiveness, the promotion of alternative forms of higher education outside traditional four-year college and the abolishment of a system that relies on hundreds of billions of dollars in federal borrowing should all be on the table as Democrats seek to fine tune their own populist economic platform.
The 2016 presidential election wound up being decided by a radical shift of thinking on trade, an issue neither party seriously talked about even two years ago. The 2020 election could come down to whomever has the courage to think big about freeing a generation of Americans from student loan debt slavery.