Supreme Court ruling, White House response highlight anti-democratic nature of student debt crisis

Last week, six members of the U.S. Supreme Court determined more than 40-million student borrowers across the country would not receive $20,000 in debt relief previously promised by the Biden Administration, dealing a financial blow to a large swath of working-class families still recovering from the heightened capitalist crisis following the COVID-19 pandemic. The White House subsequently released a statement promising new actions to provide debt relief using the Higher Education Act and hinting at a low-income repayment plan and staggered return to repayment. 

Meanwhile, student borrowers and their families—both in Milwaukee and across the country—prepared to bear the increased economic burden as some of the government’s most anti-democratic mechanisms set the stage for their coming struggle.

A Problem for the Nation, a Problem for Milwaukee

The ruling comes as more than two-thirds of students take out more than $30,000 on average in federal loans per year for their post-secondary education, according to the National Center for Education Statistics. For many borrowers, though, student debt balloons well beyond their principal dollars, thanks to added interest and low graduate wages. A 91-year-old ex-NYU law student notably owed $329k on a $29k loan in 2022.

Functionally, the ruling means that borrowers may be forced to choose between paying their monthly student loan bill and their other financial requirements—high utility rates, rents, inflated grocery prices, obscene medical bills—which could bar them from access to resources that are necessary for living. If borrowers choose to prioritize these resources and miss loan payments, they may face additionally-devastating penalties, including court action, garnished wages and devastated credit scores, which determine a borrower’s ability to gain access to transportation or housing.

In Wisconsin, more than 700,000 people (about 23 percent of the state’s labor force) are weighed down by student debt obligations. On average, Wisconsinites owe $32,000 apiece, with Milwaukee-area metro borrowers facing the worst average rates in the state. Many of these borrowers will be unable to make the mandatory payments, regardless of their good intentions.

“[S]tudent debt isn’t going to be paid back, for structural reasons, which puts the onus on policy-makers to re-evaluate a system that originates hundred-plus billion dollars of new student debt every year—debt that will necessarily be written off, one way or another,” researchers at the Jain Family Institute stated in a 2023 study.

This means that living conditions for many in the area will noticeably deteriorate as mandatory student debt payments return in August and they are forced toward further economic precarity. Because the capitalist system requires continued economic growth for success, even non-borrowers will face the social and cultural effects that follow, as funds are expropriated from so many workers. 

As fewer people are able to spend money on cultural engagement—that is, going out for drinks, having a meal at a local restaurant, catching a Brewers game—local businesses will increasingly struggle and eventually shutter their doors (again, the student debt crisis affects nearly a quarter of the state’s workers). What will remain are those businesses large enough to supplement the missing cash flow and those new upstarts made by those with enough wealth to avoid the crippling debt, many of whom will necessarily live outside the city and further expropriate community resources.

Beyond the wave of suffering coming for working-class college grads then, the continued fleecing of workers  by way of debt will hollow out weakened pillars of culture across the country as the actual people who live there lose economic access to the things that popularize their hometowns. Imagine a future, walkable Water Street lined with chain stores, restaurant groups, and the plastic smell of heavy credit cards, a place where only society’s biggest exploiters, the real-life Roy families of the American midwest and their friends, can enjoy the fruits of the city’s labor. 

Mayor Cavalier Johnson has promised big population growth for the city of Milwaukee. A push for growth at a moment of national economic precarity for the working class would necessarily mean that the growth largely appeals to those with capital, the wealthy rather than the workers. The gap between rich and poor continues to grow, and a financially wasted working class will be less able than ever to contribute to the vibrant culture of our city, taking on two and three and more jobs to pay off cruel debts. Capital will continue to cement itself as the chief tastemaker in American society.

Anti-Democracy All the Way Down

The Supreme Court’s decision Friday has been criticized as the latest in a slate of antidemocratic efforts from the nation’s most anti-democratic body, as six individuals ultimately decided the economic fate of 40 million others.

The fight against democracy, however, moves far beyond the single ruling. Biden’s own proposal would do little for working-class borrowers in the long term. The Brookings Institution—far from a working-class organ—noted that even President Biden’s modest loan forgiveness proposal “does not go far enough in addressing the root of the problem: a postsecondary education system that has seen tuition rise three-fold in the last 30 years. That same system will put future borrowers in peril.”

In short, without a truly democratic solution like universal public education, people across the country will continue to find themselves crippled by debt for performing the socially necessary task of learning more about the world around them to prepare for various fields of work. As it exists, the college-industrial complex largely exists to recreate the desired structure of the capitalist class: people become indebted to learn socially desirable professions and participate in a good deal of elbow-rubbing to ensure their access to those professions (hardly the bastion of radicalism so demonized by the right). The university is a necessary arm of the social establishment in recreating itself, and thus the establishment spends a good deal of money promoting its supposed necessity to young people only to inundate them with obscured costs later in life.

In 2022, the White House pointed out in a statement that the total cost of both four-year public and private colleges had nearly tripled in the previous decades, a crushing blow to those pursuing economic security. The rising price has, in effect, put many working-class Americans in a bind. On the one hand, employers demand degrees for many types of work, including socially-necessary work, but on the other hand, workers face a lifetime of indebtedness for their participation in “educated” society.

For some, especially low-income workers, the high tuition costs act as a barrier to the jobs they want to work. Instead of taking on debt, they may seek other career paths with less economic demand for entry. To these workers, the U.S. government offers an alternative solution: be prepared to die for others’ interests in the military for a few years and receive free or discounted tuition in return. Around five percent of students at public institutions are either active military members or veterans. Most of those who take this route reportedly do not graduate with a college degree, hardly an even trade.

The current system does not favor the majority of working people in Milwaukee or across the country. It is no wonder then that Biden promised some debt forgiveness on the campaign trail, and less of a wonder still that so many from the working class continue to demand not just a paltry offering to be swallowed up by the remaining interest, but complete student debt forgiveness.

Debt as Catalyst 

Contrary to popular belief, debt forgiveness is not a radical idea. Not only does the idea have a long history, it has helped to catalyze major historical changes in the political economy.

Across human history, debt relief has secured power, ingratiated leaders to the populace, and represented the changing of times, and more than once, its absence has led to revolt. Shays’ Rebellion in late 18th Century Massachusetts and the earlier creation of British Parliament both centered on monetary debts, and both stories include the spilling of blood.

It remains to be seen what will happen for debtors and those who hold their debt in the U.S., but that history will be shaped, as history is always shaped, by the working class and their actions, rather than the dollars of capitalists.

Following the Supreme Court’s announcement Friday, the Biden Administration released a new plan to seek an alternative path to debt relief, promising lower income-based repayment plans and a year-long “on-ramp” process to stagger return to mandatory payments. This meager tray of wilted efforts is not up to the task of creating a better world, but it is not intended to create a better world but to silence the hunger pangs of the current world for a time. The short gains offered are too-quickly swallowed up by the upside-down social relations that keep working people lacking when the bosses have more money than they can possibly spend. Any resumption of student loan payments will be a step backward in economic stability for a massive swath of people for whom mandatory payments were paused during the onset of the COVID-19 pandemic.

This mere list of technocratic promises from the hands of the few does not have to suffice, though. Workers and student debtors, through their shared power, may choose to fight back. The Debt Collective, a debtors union, is organizing debtors to prepare for a debt strike, in which borrowers band together and withhold payments collectively to protest their exploitation. This and similar coordinated mass actions could force further cancellation and center the borrowers in the conversation about debt, rather than those in power. After all, repayment is not, by any serious standards, realistic.

Furthermore, a “debt jubilee” in which student, medical and other public debt records are wiped clean (as Solon did in Ancient Athens and others have many times since) is necessary to reset our social relations, to truly make progress at making all folks equal. Without an action so bold, the inequalities reinforced by systemic evils like racism (how many stories are there of economic outcomes determined by one’s skin color) will continue to appear as mechanisms of exploitation, even if kicked down the road with reforms that ultimately maintain the status quo.

These bold outcomes are possible, but they will in turn require bold actions. It is within our collective power to manage our resources, meaning that any system for delivering those resources—including the education system that prepares to do the work of delivering them—is within our control, just so long as we are bold enough to join together and claim that control together. 

If the human spirit is able to overcome the divine right of kings and put people on the moon, the masses can surely determine a better way to go about supplying our society with higher education. After all, the federal student loan system isn’t the result of a law of nature – but the product of a failed set of human institutions. Another world is possible.

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G.D. Brown is a working-class writer living in Milwaukee, Wisconsin. His debut novel, Sinners Plung­ed Beneath That Floo­d, was published by Leftover Books in 2022.