Student Loans Aren’t Working
ON THE DAY he signed the Higher Education Act of 1965, President Lyndon B. Johnson declared that the law would “swing open a new door for the young people of America” and provide “a way to deeper personal fulfillment, greater personal productivity, and increased personal reward.” Johnson wanted Americans to know that his government would do whatever it could to help “every child born in these borders to receive all the education that he can take.”
Signed at Southwest Texas State College, Johnson’s alma mater, the Higher Education Act authorized federal scholarships and federally funded part-time jobs for students who could get into college but couldn’t pay for it. But the real catalyst for increasing college enrollment was a provision that allowed the government to directly lend students money for tuition and to guarantee loans made by other entities. This new lending authority, Johnson said at the signing ceremony, would allow the federal government to issue to “worthy, deserving, capable students” loans “free of interest and free of any payment schedule until after you graduate.”
The modern approach by which students finance higher education grew on and around these three policies—federal scholarships, federal work-study funding, and federally guaranteed loans—like vines around a trellis. Yet half a century later, many young Americans feel that Johnson’s signature education initiative has saddled them with excess debt and delayed their graduation into middle-class adulthood.
The Occupy Wall Street protests of 2011 started as a cacophony of disparate complaints against the financial sector but eventually coalesced around college debt. The idea of forgiving student loans has since moved from poster boards on the streets of Manhattan and D.C. to the campaign websites of Democratic presidential candidates, with Sen. Bernie Sanders (I–Vt.) promising to wipe out student debt for all borrowers and former Vice President Joe Biden pledging to expand existing loan forgiveness programs.
Johnson wanted future generations to think of the Higher Education Act of 1965 as a promise from the federal government: “Tell them that we have opened the road and we have pulled the gates down and the way is open, and we expect them to travel it.” He and the 89th Congress paved that road with the best intentions, and many millions of young people have indeed traveled along it. Why, then, do so many Americans who have participated in our system of financing higher education feel like they’ve been ripped off?
Because many
