In fact, the day they shot the episode says Minhaj, a poll of about 200 people in his live studio audience showed they owed an incredible six million dollars of student debt “in that room alone,” a revelation that really hit home with members of his audience.
On the episode, Minhaj illustrated how students and families are taking desperate measures to pay off crippling debt. Patriot Act aired excerpts from Paid Off, a comedic game show on truTV where contestants compete for money to pay off their student debt. Contestants earn a percentage of what they owed in loans for each correct answer and could clear their entire student loan if they guessed eight answers correctly. Paid Off host Michael Torpey called the student debt crisis an “absurdly tragic” situation that was holding back millions of people and the nation’s economy.
Debt is Stacked Against Student Borrowers
Today 44 million Americans have outstanding student loan debt, which can take decades to pay off. Estimates show the average borrower owes more than $37,000 in debt, and more than 2 million student borrowers owe over $100,000 in loans. In the US, student borrowing is expected to hit $2 trillion by 2020.
“You paid far less for your degrees!”
“We know that debt is stacked against student borrowers, in ways that it wasn’t 10 or even 15 years ago”, noted Minhaj, who had done his homework on where the 60 members of the Financial Services Committee had gone to college and what they had paid in tuition.
He told committee members “ …you have paid far less for your degrees,” pointing out that in 1971, Chairwoman Maxine Waters would have paid the equivalent of only $1000 a year at Cal State, LA, while today, Cal State costs well over “…six grand a year, …more than a 500% jump.”
Members of the committee, who on average graduated 33 years ago, paid the equivalent of $11,690 a year, said Minhaj “even adjusting for inflation.” Over that period of time, wages have increased only by 16% while tuition costs have spiked by 110%, so that, “Today the average tuition at all of your same schools is almost $25,000.”
The American dream is slipping away from millennials
“The issue is sidelining millions of Americans,” says Minhaj (33), especially with his generation, who are putting off marriage, kids, home ownership and retirement. “Growing up, it was drilled into our heads, you gotta go to college, if you want a middle class job,” something that “we even tell kids today.”
But people aren’t making more money and college is way more expensive creating ‘a paywall for the middle class’ that Americans don’t deserve, says Minhaj. The fact is that two-thirds of all jobs in America require a bachelor’s degree, at a minimum, a standard that was not the case, “when most members of this committee were in school.”
Though average student debt hovers around $30,000, most graduates even with bachelor’s degrees barely make a wage that covers cost of living and student loan bills.
As a result, borrowers facing crushing debt can barely afford everyday necessities like rent, groceries or car payments, while repayment struggles and poor credit ratings makes it difficult for many borrowers to buy homes or cars, start a business, or begin even new employment opportunities.
The Department of Education is one of the nation’s largest creditors
Minhaj made it clear that student borrowers are trying to take responsibility for paying their loans, despite reports to the contrary. “They are investing in education and trying to pay their loans back.” It is unfair to treat many borrowers “like deadbeats,” said Minhaj, especially when the government is to blame for placing the financial futures of debt-ridden students in the hands of unscrupulous, “predatory, for-profit loan servicing companies,” like Navient.
“The worst part,” of the student loan crisis, stated Minhaj, “is that borrowers don’t even get to choose their loan servicer – the Department of Education does that for them.”
Why the math doesn’t work at Navient
Minhaj singled out Navient as a prime example of a predatory, unregulated, loan servicing company that uses deceptive loan servicing practices – like placing borrowers in high-cost repayment options known as forbearances – to boost corporate profits.
Navient misled borrowers, “…pushing them into repayment plans that in some cases, have cost individual borrowers tens of thousands of dollars,” in compound interest, collection charges and late fees, while the lack of competition, said Minhaj, allows corrupt companies like Navient to get away with sub par service.
On September 18, new court documents released by SBPC (Student Borrower Protection Center) revealed that Navient executives plotted to cheat struggling student loan borrowers of billions in extra fees, while raking in taxpayer dollars and paying shareholders huge amounts of money. Senior executives at Navient planned to deceive borrowers by placing them in ‘forbearances,’ resulting in more than $4 billion in unnecessary interest charges passed on to borrowers, according to lawsuits filed by federal and state enforcement officials.
SBPC Executive Director Seth Frotman said in a statement, “The evidence unsealed today in federal court confirms that Navient’s practices that added billions of dollars of debt to struggling borrowers emanated from the top echelon of the company. This follows a decade-long pattern of Navient ripping off service members, disabled veterans, teachers, and American taxpayers. The time has come for policymakers to admit this company’s practices are predatory and corrupt—it should not be given a single additional taxpayer dollar.”
Students deserve better service, not bankruptcy
In his closing statement Minhaj reminded Congress that “students deserve better” from a government “we know is capable of stepping in during a financial crisis – so really all I’m asking today is why can’t we treat our student borrowers the way we treat our banks?”.
Students borrowers deserve some basic protections, Minhaj concluded, so that “Americans should not have to go bankrupt pursuing higher education.”
Meera Kymal is the Contributing Editor at India Currents.