Most of the pomp and circumstance processionals are over now. The last notes of the traditional march have faded from the air, the speeches made, the dorms emptied, to be readied for the advent of the September first years. The college class of 2019 has commenced — launched into the real world of work if they are lucky, but likely unable to escape a reckoning with the debt which financed their education.
In case you missed it, the total college debt crept up to $1.5 trillion this year. It’s massive, second only to mortgage debt and bigger than both credit card and auto loans. Forty-four million borrowers were already on the hook for that debt repayment, and the new graduates just joined this financially challenged group. Everybody, that is, except the graduates of Morehouse College, whose commencement speaker, billionaire Robert Smith, pledged to wipe out all of the 2019 class’ debt. The 396 graduates of the historically black all men’s college were shocked into silence at first, before erupting into joyous screams and cheers.
Smith’s surprise and substantial generosity — easily $40 million by some estimates — comes amid a public existential question about whether the price of higher education is worth it, and the public exposure of the sleazy details of super wealthy people willing to buy college admission for their kids. And don’t forget there’s been a 40 percent increase of seniors — older folk, not fourth-year students — who still owe, even though they graduated decades ago. Worse, default rates are at an all-time high as borrowers sink under the weight of the loans plus interest rates.
I am always guiltily relieved when I read how much average students today are carrying in loans. Relieved because when I graduated, I had, by comparison, a measly $3,000 to pay back on my own. That was still a lot for me back then. And it still took me a long time to whittle it down, because my first real paycheck barely covered my rent and food. I would have been extremely grateful for any help from my employer.
If Congress acts soon, graduates could speed up repayment under the Employer Participation Repayment Act, a bipartisan bill co-sponsored by Republican Sen. John Thune, concerned that graduates “trade their cap and gown for debt and uncertainty,” and by Democratic Sen. Mark Warner, who “relied on student loans” as the first in his family to go to college. Companies already get a tax break when they contribute to tuition aid, $5,250 a year. This bill would expand the tax incentive to employers like Massachusetts-based New Balance. In a statement, the company said it was ready to contribute to graduate/employees' debt repayment — “All we are waiting for is federal legislation.” The bill enjoys broad support from House members and at least two dozen senators, as well as the president’s daughter and advisor, Ivanka Trump. But to pass, it would have to be folded into a larger Senate tax bill, and many predict it won’t survive the politics of all those other issues.
But if the bill passes, it will offer some relief to debt-saddled employees, even as state lawmakers — some of them with heavy debt burdens of their own — push for protections for the 855,000 local student borrowers. Beyond that, students will have to see if tuition-free college, like the proposal from Sen. Elizabeth Warren, becomes reality. Or hope that Robert Smith is feeling generous next year.