Debt Collection Without Representation: Congress and the Student Loan Crisis

“Today would be a great day for President Biden and Vice President Harris to #CancelStudentDebt,” Senator Chuck Schumer (D-NY) tweeted about one week after the Biden administration took office in 2021. The Senator’s message is a popular one, repeated by other progressive Democrats online and elsewhere. But why are federal representatives taking to an online platform to demand debt cancellation? Why not write legislation or push existing plans to cancel all student loans by raising taxes on Wall Street?

Perhaps the 45 million Americans holding close to $1.73 trillion in student loan debt have the same questions. Outstanding student loan debt has been found to represent a larger financial burden on US households than mortgage, medical, or credit card debt, and it causes debtors to delay other economic milestones, such as buying a home. Now, after more than two years of pauses, federal loan payments are set to resume at the end of August—with no indication from the White House that there is intent to cancel debt altogether.

A recent report by The College Investor, an online resource aimed at helping millennials navigate debt burden and financial decision-making, aims to investigate why federal representatives may be unable—or unwilling—to take action when it comes to student debt. Members of Congress are responsible for creating policy around alleviating the student debt crisis, but are their personal financial situations anything like those of the populations they are supposed to represent? And if not, what affect does this have on the government’s ability to offer real solutions to the problem?

Haves and Have-Nots: Who Has Debt in the Capitol?

The College Investor report showed that when it comes to the student loan crisis, members of the House of Representatives and the Senate are not very representative at all. To make this point, The College Investor combed the financial disclosure statements of every single congressperson and senator in the United States. An overview of these statements showed that:

44 of the 435 members of the House of Representatives have student loans in their household, either for themselves or for a family member.
Of these 44, ten of the Representatives’ spouses had student loans.
Only three members of the Senate have student loans, with one belonging to a member’s spouse.

What does this mean? On the surface, these numbers show that only 10.1 percent of the House of Representatives holds student debt, as opposed to almost 14 percent of Americans. The report also indicates that student debt holding is not overwhelmingly partisan, as the 44 members with loans are split 26 Democrats to 18 Republicans. Furthermore, the average student loan borrower in the House of Representatives is 50 years old, skewing slightly older than the majority of borrowers. Many of the loans were for spouses or co-signed for children.

The Senate is even less representative: only three senators disclosed student loan holdings, one of which is for a spouse, meaning that only three percent of the Senate holds student debt at all. All three of these Senators are Democrats.

The Math and the Psychology: Why Congress Can’t—or Won’t—Act

“When we’re having policy discussions on reforming student loans, student loan forgiveness, financial aid, and more,” The College Investor report notes, “it’s important to understand if those in power and making policy even fully understand the whole scenario—the math and the psychology.” The founder and author of the report, Robert Farrington told NPQ that what inspired him to take this deep dive into House and Senate member’s finances were recent demands by Congress members to sign away debt by executive order, which struck him as strange: “Really, the crux of all legislation comes from Congress, which is supposed to be a representative body of the American people, especially in the House of Representatives. So, we were very curious: how representative are they when it comes to the question of student loan debt? Do they have student loans?”

The data shows that personal experience with economic hardship has a huge effect on politicians’ ability to create and advance effective policies. “They just don’t have first-hand experience,” Farrington explained. “They don’t have experience in their families. Even those that do have a way above-average salary compared to most millennials.” With high salaries and low debt, federal representatives have little in common with their constituents, particularly with people aged 25-40.

Another cause of congressional inaction is the drastic generational divide between the governors and the governed. This Senate, for example, is the oldest one to ever preside in this country; the average senator’s age is almost 65—the age of the average retiree, not the average college graduate. “Even when you look at the breakdown of who has student loans in the Senate,” Farrington noted, “the three senators that have it are aged 48, 48, and 45, so they’re even a little older than the millennial generation.” Most of the politicians sitting in the highest offices in US are decades older than the people they purport to represent. The last time they were making decisions around higher education and personal finances, the report notes, was the early 1970s. Meanwhile, college tuition has risen over 260 percent since 1980.

This disconnect is also glaringly obvious in terms of approach, as Congress does not seem to be turning to constituencies to help secure legislation. “You don’t see them having committee hearings where they’re getting individual borrowers up there to tell their story.” Allowing testimony from affected constituents could be one way to show how widespread and serious the problem is. But because Congress does not know how debt burden feels in any practical sense, they have not turned towards those who do to help. In other words, being out of touch with the everyday reality of millions of Americans in a material way has led to impotent strategy and ineffective governance.

This also applies to what little policy has been proposed to alleviate student loan debt. Even President Biden’s unambitious campaign promise to forgive a minimum of $10,000 of federal student loans has not been honored. But even these plans, Farrington told me, will never be enough. Without full higher education reform, including total student debt cancellation and free college, we will end up right back in the same place: “The data has also shown that a cancellation of $10,000 with no changes to the system will put us back at the same amount of student loan debt within five to 10 years.” Means-testing and setting income caps is also a faulty strategy, Farrington says, and the bill will eventually come due. Fixing the system forever will require a total overhaul of higher education funding.

Pick Up the Pen: The Fight to Bypass Congress

In the absence of action from the federal government, grassroots organizations like The Debt Collective have stepped up to help debtors raise their voice and demand solutions. As we’ve reported at NPQ, their most recent demand has been for President Biden to bypass Congress, pick up the pen, and cancel all student debt by executive order.

Braxton Brewington, Press Secretary for The Debt Collective, agreed that representation is one of the most obvious barriers to policy change. “The members of Congress do not reflect the diversity of economic and racial experiences of working-class people, or really the United States as a whole. When we don’t have a representation of the people who hold student debt—which are disproportionately Black and Brown communities and women in particular—when that’s not reflected in Congress, of course it becomes difficult for the federal government to get things done.”

The Debt Collective’s strategy has focused on the President precisely because Congress is a broken institution, and they argue that he has the authority and should use it: “President Biden has the ability to wipe out all debt and change people’s economic and financial reality without going through Congress, which structurally has shown that it has grave problems getting anything done,” Brewington explained, “not just because of the makeup of who’s in the institution, but also because of the institution itself.” Many factors contribute to Congress being a dysfunctional system of governance, but its most noticeable failures lie in its increasing inability to pass large-scale, ambitious policies needed for American recovery.

Ultimately, what debt cancellation activists are asking for is parity. “In many ways, we’re asking for the same experiences that many of these members of Congress were able to have,” Brewington said, “which is a degree for essentially free, or a very low fee.” Rectifying this generational inequity will go a long way in fixing decades of economic struggle. In anticipation of payments resuming on May 1^st of this year, debtors gathered on April 4^th in Washington D.C. to push the White House to take executive action. Their efforts were acknowledged—the payment pause was extended just two days later. With additional support from sympathetic members of Congress, demands for racial, gender, and economic justice through debt cancellation are gaining ground. Hopefully, debt cancellation can happen not because of, but in spite of, Congress.