Total household debt for mortgages, student loans, credit card arrears, auto loans and more is $12.96 trillion, the highest ever. It’s larger than the gross domestic product for every country on earth this year except the U.S.
These stark figures are a reflection of the disastrous effects on working people of the crisis of capitalist trade, production and jobs in the last decade.
Nearly a quarter of those with student debts haven’t made a payment for at least a year, meaning they’re in “default,” according to the government. Workers who defaulted on their student debt in the third quarter this year jumped by nearly 274,000. Overall, 4.6 million people are in default, twice as many as four years ago.
“I had to take out new loans every semester,” Dean Mahoney, 23, who graduated from State University of New York at New Paltz, told the Militant. “I ended up with a debt of $36,000 after four years. That’s a lot to pay off and I’ve had a lot of trouble trying to do it.”
Facing required payments of $400 a month, Mahoney opted to restructure his loan with Navient Corporation, a private company that collects these loans for the government for a comfortable profit. “Navient gets 10 percent of what I make a year,” Mahoney said, “and I still owe them around $50,000. I’ll be paying back these loans for a lifetime.”
Many facing this spiraling debt load are forced to drop out of college, the New York Federal Reserve reports. Others face having their wages and tax refunds seized, and reduced Social Security payments as Washington seeks return of the loans.
“Twenty states suspend people’s licenses and credentials if they fall behind on monthly loan payments,” reported the New York Times. That means you can’t work any more if you’re a firefighter, nurse, teacher, barber or lawyer. The state of South Dakota suspends driver’s licenses, making it nearly impossible to get to work.
A bill before Congress, euphemistically titled “The Student Security Act of 2017,” offers to make a deal with those still saddled with student loan debts when they retire. The deal? The government will reduce an individual’s debt by $550 for each month they hold off from getting Social Security benefits. “Under the legislation, participants can get a maximum of $40,150 in debt relief,” reported CBS News Dec. 14. That means you can’t claim any Social Security pay until you’re over 71 years old.
Another bill being pushed in the U.S. House education committee would further tighten the squeeze. It would put a stop to programs that exist today that allow debtors to write off remaining student-debt balance if they’ve made continuous payments over 20 or 25 years.
And whatever is “forgiven” is counted as income on your taxes that year, meaning you’ll keep paying more to Washington.
“Everyone in my class is struggling with these debts unless they have richer parents to pay for it,” said Mahoney. “College-level education should be accessible to the working class.” He noted that his father, a mechanic, who went back to school about a decade ago, faces a similar situation. “He’s still paying on his loans, while I’m paying on mine. It’s really insane.”
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