Last week the U.S. Supreme Court decided that our federal government must not help citizens drowning in student debt. For the Supreme Court, it is just fine and dandy that Congress bailed out the airlines with $50 billion in free money during COVID. The justices did not question the bailouts and financial manipulations totaling more than $8 trillion for the top six banks in our country after the 2008 financial crash, which these same banks engineered. The $953 billion Paycheck Protection Program bailed out businesses during COVID and was used by many congresspeople as a personal financial conduit, some gaining hundreds of thousands of dollars and some gaining millions from the federal government. That, too, wasn’t questioned by the Supremes. But when it comes to adults who have strived to gain higher education — they are not worth the trouble.
In our state, that leaves almost 800,000 residents still in the prison of student debt: One out of every 10 of us. Under President Joe Biden’s plan, half of these residents would have had their student debt of under $20,000 completely forgiven. Another 100,000 would have seen at least $10,000 taken off this debt.
Who are these debtors? In our state, three out of five are Pell grant recipients. Pell grants cover about one third of the cost of a college education. Single people would have to earn less than $32,000 in today’s dollars to get a Pell grant. For a student from a four-person family, that family’s income would have been less than $52,000. According to the Seattle Times, in 2019-20, the household income of nearly 90 percent of Pell grant recipients was less than $50,000, with 80 percent reporting less than $40,000.
If your income is just a tad above these ceilings — for example if you make $20 an hour and are working 36 hours a week — you don’t qualify for a Pell grant. So students from poor, working class and middle class families are forced to take on student debt if they want to complete college. Of course, the children of affluent parents skip over all this financial trauma, because their parents just shoveled out the money for tuition and living expenses, another example of the intergenerational transfer of income and privilege.
Pricing students out of higher education isn’t new. Washington residents have seen the cost of “public” higher education go up and up and up in the past four decades. During the financial crisis, Gov. Christine Gregoire and the Legislature doubled tuition from $7,500 to $15,000 in five years.
When Gov. Jay Inslee attended the University of Washington in the 1970s, his tuition was about $2,500 in today’s dollars. Inslee started out at Stanford but dropped out after his first year because he couldn’t get a scholarship. So our keystone public university became his alma mater. Now, mandatory tuition and fees at that public university, the University of Washington, total $14,000, more than five times what Inslee paid when he was a student there. Is it any wonder that half of high school graduates don’t enroll in four-year or two-year colleges?
The elected leaders of our state wonder why more students aren’t going to college. They wring their hands about student debt, but they don’t seem to make the connection between the increases in tuition that they have authorized and the tripling of student debt between 2006 and now. Democratic politicians in particular will denounce, as they should, the Supreme Court’s action. But that is empty rhetoric, geared more toward campaigning than governance.
Most of us think that we have no ability to reverse this wrong in our own state, but actually, this is the best state for the remedy. While we can’t get the federal government to remove student debt, our governor and Legislature could step in and provide the financing that would. In 2013 the governor called a special legislative session to create a multi-billion tax bailout for Boeing (which that company then used to invest in a plant in South Carolina and eventually shift all 787 production from Everett).
How about something that would be more worthy of citizenship, an act that increases our commonwealth, not the individual wealth of corporate titans and oligarchs? The price tag for excusing $10,000 of student debt for almost 700,000 residents in our state is a little less than $7 billion. A 1 percent tax on intangible wealth in excess of $100 million (think stocks and bonds) exceeds $7 billion. With this tax, one third of federal student loan borrowers will be completely free of student debt. Another fifth will have at least half of their debt erased, and another fifth will have at least one quarter of their debt erased. That means that in the following year the wealth tax can be used to cut current tuition by at least one quarter, and in the year after by another quarter, gradually making the source of the student debt crisis diminish and disappear.
The revenue from this wealth tax is most likely underestimated. We now know that Jeff Bezos’ net worth grew by $47 billion to exceed $150 billion; Bill Gates’ wealth grew by $24 billion to more than $134 billion; and Steve Ballmer’s wealth grew by $32 billion to more than $118 billion. That all occurred in the past six months.
What does it take to call a special session? A decision by the governor and an agreement by the Democratic leaders of the House and the Senate. Will they choose a tiny tax on Bill Gates, Jeff Bezos, Steve Ballmer and 2,100 other super-wealthy residents of our state who own more than $100 million, in order to benefit the 700,000 residents drowning in student loan debt? Will they challenge wealth to create our commonwealth?
Read more of the July 12-18, 2023 issue.