Courts Block Student Debt Relief: To Cancel Student Debt, Cancel Capitalism!

On June 30, the Supreme Court ruled against Biden’s student loan forgiveness program. This would have granted up to $20,000 in forgiveness for Pell Grant recipients, and up to $10,000 for all other federal student loan borrowers.

Coinciding with the Court’s ruling, the moratorium on student loan payments is also coming to an end this summer with the debt ceiling bill passed by Congress, which included a string of austerity measures. After being extended nine times under Trump and Biden, this crushed any hope of a further extension of the payment freeze.

As the world economy teeters on the brink of collapse, 43 million people will face an additional bill averaging over $500 per month come October. The reprieve from payments allowed many people burdened with debt to start a family, buy a home, or simply survive. As one respondent to a CNN poll stated: “Everything is so much harder now. I would possibly be homeless if I had to repay [student loans] during COVID, and I am still continuing to struggle. If it restarts, I am in fear of what will happen to me and my family.”

Education need not be a scarce resource only afforded to the wealthy. We have the means to provide free, quality education and job training to everyone. However, the for-profit nature of education in American capitalism has given rise to a huge stratum of deeply indebted workers struggling to make payments on their loans even before the next recession hits.

No trust in bourgeois institutions

Interest and payments on federal loans were paused as a “national emergency” measure at the beginning of the pandemic as part of the HEROES Act. The federal government’s plan for partial debt forgiveness used the same legal premise. The case brought before the Supreme Court argued that it was not Biden’s prerogative to direct the secretary of education to forgive the debt. Rather, according to the Court, the proposal should have been approved by the bipartisan Congress.

Thus, nine unelected judges who are appointed for life have ruled that the student loan forgiveness plan is unconstitutional because it didn’t go through the proper “democratic” channels.

The ruling once again highlights that workers and youth cannot rely on voting for supposedly “kinder” capitalist politicians, or on waiting for the institutions of bourgeois rule to deliver any meaningful reforms. The court system is not neutral—it is one of the main pillars of the bourgeois state, which exists to defend capitalism. Just as with the right to abortion access or the right to strike, we cannot depend on unelected judges to defend the right to education.

Far from being impartial, the Supreme Court Justices have a bias in favor of the rich. Hedge-fund billionaire Paul Singer, who donated to a group aiming to block student debt relief, knows Supreme Court Justice Alito well enough to pay for a private jet flight to Alaska for a “luxury” fishing trip.

An insufficient “reform”

While the debt forgiveness would have provided some much-needed relief for millions of students and workers, it would have fallen far short of canceling student debt outright. Currently at $1.78 trillion, national student debt is the second-largest US household debt component, with at least 90% of it in federal loans.

The now-blocked package would have eliminated less than one-third of the total debt, leaving more than half of all students and graduates with outstanding balances. The initial proposal of up to $20,000 of loan forgiveness is particularly pitiful when taking into account that the average student loan accrues $27,000 in interest alone over the 20 years it typically takes students to repay it.

Biden’s student loan forgiveness program represented crumbs for the working class to fight over. The US has so far sent more than $75 billion to Ukraine for its proxy war against Russia, and increased the military budget by another $20.5 billion for 2023. By contrast, the student debt relief package was estimated to cost $30 billion per year over ten years. The combined budget for the Department of Education amounts to about $194 billion, while the so-called Department of Defense devours upwards of $2 trillion. As for the billionaires, they have a combined wealth of $5.1 trillion—$2.1 trillion more than before the pandemic. And yet, it is claimed there is “no money” for social programs such as education and health care!

The federal budget is nearly entirely funded by taxes on the working class and the printing of money. Because of this, any so-called “reforms” passed by either of the capitalist parties are in reality a matter of taking with one hand and giving with the other. In the final analysis, as long as capitalist profits remain untouched, the working class foots the bill—whether through taxes or the inflation that can result from so-called quantitative easing. The result is to turn one section of the working class against another.

Divide and conquer

The right-wing media framed the debate on student loan forgiveness as a zero-sum game between the “college-educated worker” and the “blue-collar” worker. Florida Governor DeSantis cynically used identity politics to divide workers on the issue, saying: “It’s very unfair, you know, to have a truck driver have to pay back a loan for somebody that got, like, a PhD in gender studies. That’s not fair. That’s not right.”

Shortly after Biden announced the program last September, 22 Republican governors signed a letter calling on him to cancel it. It painted those with student loan debt as an “elite few,” saying the plan “rewards the rich and punishes the poor.” In reality, the loan forgiveness program primarily targets recipients of the Pell Grant, whose family incomes are typically below $30,000.

This “either-or” rhetoric can be used to endlessly divide the working class into smaller and smaller groups, all pitted against each other. One of the plaintiffs who pursued a lawsuit against the program would have actually benefited from it, but argued it was unfair since he did not receive a Pell Grant, and consequently would have only received $10,000 instead of $20,000. This lawsuit was backed by the Job Creators Network, a right-wing organization that advocates for tax cuts for small businesses, with members including the former CEOs and executives of “small businesses” such as Best Buy, Home Depot, and PepsiCo.

To back their divide-and-conquer rhetoric, Republicans pointed to the fact that “only” 17% of Americans have federal student debt, leaning on the impression that college-educated workers are generally well paid. In fact, this represents a whopping 43 million people. Since 2009, college enrollment increased by 34%, with young people chasing the promise of better paying and more secure jobs. But for many, it was a false promise: the growth in college enrollment and loans has not been reflected in a rise in median wages. In fact, median debt is actually growing faster than median income.

In the absence of a mass workers’ party and militant labor movement that could cut across this reactionary polarization along capitalist party lines, the media campaign had an effect. The plan was announced in August of last year, after a summer in which inflation peaked at 9%. Amidst claims that loan forgiveness would further increase inflation, popular opinion on the program was split down the middle, with 43% of voters in favor and 44% against.

Private property is the problem

Only in the context of capitalism can the partial forgiveness of student debt for workers who went to college be framed as coming at the expense of workers who did not. In truth, the parasitic “elite minority” is not the tens of millions burdened with college debt, but the capitalist class that hoards society’s wealth. The courts, both capitalist parties, Congress, and all the other institutions of bourgeois rule exist to defend private property above all else.

Private property of the means of production and the profit motive dictate the funding and cost of universities. Even though federal financial aid is paid directly to students, it becomes a subsidy for the universities to expand their budgets and increase tuition. Without price controls, federal aid does not decrease the financial burden on students.

The average tuition, room, and board costs at a four-year university have increased by 727% between 1976 and 2006, while the average Pell Grant recipient has only seen their award increase by 327% over that same period. In 1976, the grant covered 29% of tuition, on average. In 2006, that was down to just 13%.

Rising university revenues are not primarily invested in classrooms, instructor wages, or better benefits for workers, but rather, accrue to those at the top. There is a direct correlation between university president salaries and the fastest-growing student debt. Dozens of university presidents earn multi-million-dollar annual salaries. And college football coach salaries saw a spike of 15% in 2022, with the highest-paid earning over $10 million.

In a for-profit education system, FAFSA becomes “Financial Aid For Salaried Administrators.” Just as the wage gap between the salaries of CEOs and their workers has increased, so has the gap between college presidents’ salaries and the wages that graduates from those colleges earn after several years in the workforce.

At the end of the day, universities are subject to the same laws as any business. Within capitalism, even public universities have to compete in the free market, as they must purchase supplies, real estate, and laborers from a for-profit system. As a consequence, the universities have no option but to adopt the same behavior as capitalists generally.

Indeed, they have become one and the same: corporate executives sit on university boards of trustees, and university administrators sit in corporate board rooms. Students are the “customer,” but also the raw material for the “university factory.” Universities produce a type of skilled worker that goes on to be employed by the capitalist, and their ability to work is a mere commodity and factor of production. As long as the capitalist system remains, universities will continue to be under pressure to “corporatize” and model themselves as for-profit businesses, exploiting students and campus workers alike.

Nationalize the private universities! For a fully-funded public education system!

The socialist solution to the student debt crisis and rising tuition goes beyond just partial debt forgiveness and scholarships. It would begin by nationalizing the private universities and colleges, and getting corporate influence out of the universities. Instead of shadowy boards of trustees and regents, there should be public ownership, oversight, and control of universities, with meaningful input from campus workers and student unions, as part of a unified public education system.

Campus workers around the country have already shown a willingness to organize and fight for union recognition and better contracts, as we recently saw in the largest higher-education workers’ strike in US history at the University of California system. From Rutgers University in New Jersey, to The New School in New York, to Temple University in Philadelphia, the campus strike wave had huge support from the student population, as it was seen as a fight against the profit-centered policies of university administrations.

The battles for graduate student union recognition and better contracts for unionized campus workers should be generalized and given a political backbone through a mass working-class socialist party, independent from the Democrats and Republicans. Rather than pitting sections of the working class against one another, such a party would fight for free tuition, cancel all types of household debt, and provide minimum stipends for students of $1,000 per week, with a minimum wage of the same amount for all workers.

Free, quality education for all and total student debt cancellation could be realized by expropriating the Fortune 500 CEOs that sit on the university boards. Tuition and fees could be reduced to zero in a democratically planned economy run by and for the working class. To cancel student debt and abolish tuition, we must fight for socialist revolution!