The more than 45 million Americans with student loan debt got good news this week, as President Joe Biden announced the government would forgive $10,000 in federal student debt – and up to $20,000 for low-income students who received Pell Grants. In 2016, Reveal reported on how both Wall Street and the government profit off student debt. James B. Steele and Lance Williams wrote:
Decades ago, the federal government relinquished direct control of the student loan program, opening its bank to corporations concerned with profits, not diplomas. Private equity companies and Wall Street banks seized on the flow of federal loan dollars by peddling loans that students sometimes could not afford and then collecting fees from the government to hound those students when they defaulted.
Once in place, the privatized student loan industry has succeeded largely in preserving its status in Washington. Student loans are virtually the only consumer debt that cannot be discharged in bankruptcy except in the rarest of cases – one of the industry’s greatest lobbying triumphs.
At the same time, societal changes conspired to drive up the basic need for these loans: Middle-class incomes stagnated, college costs soared and states retreated from their historical investment in public universities.
If states had continued to support public higher education at the rate they had in 1980, they would have invested at least an additional $500 billion in their university systems.
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