The Truth About Degrees, Debt, and Why You’re Always Chasing the Next Credential (Glen McGhee)

A System Designed to Keep You in Debt

If you're in college right now, you’ve probably heard that getting a degree is the key to success. But have you noticed something strange? Everyone seems to need more and more education just to get the same kinds of jobs. A high school diploma used to be enough. Then it was a bachelor’s degree. Now people need master’s degrees—and still struggle to get hired.

Meanwhile, tuition keeps going up. Student debt in the U.S. has reached over $1.7 trillion, affecting more than 43 million people. Many of us are borrowing tens of thousands of dollars just to get a shot at a decent job. Some never escape this debt, even decades later.

This isn't just bad luck. It's a system, and it works really well—for banks, employers, and universities. But not for you.

Credentials Are the New Chains

A few critical thinkers—like economist Michael Hudson and philosopher Maurizio Lazzarato—have a name for what’s happening: debt peonage. That’s a fancy way of saying people are trapped in endless debt, not because they’re lazy or irresponsible, but because the system is built to keep them there.

They argue that education has been turned into a machine for generating debt. It’s not just about learning anymore—it’s about taking on loans you’ll be paying off for decades, often for jobs that don’t even require the degree you earned.

This debt doesn’t just affect your bank account—it shapes your whole life. It influences the jobs you take, how much you’re paid, whether you can move, start a family, or speak up at work. In other words, debt is a tool of control.

More School, More Debt, Less Power

There’s a name for what's happening with degrees: credential inflation. It means that as more people earn degrees, employers keep raising the bar—asking for more education, even if the job doesn’t really need it.

This works out great for employers. You need the job to pay off your loans. You’re less likely to ask for higher wages or better conditions. You’re easier to control. Think about it. When you owe $38,000 in student loans, can you really afford to quit your job? Or turn down unpaid internships? Or fight back when you’re treated unfairly?

That’s not a bug in the system—it’s the point.

The Rise of the Academic Underclass

It doesn’t stop with students. Many of your professors and TAs are also part of what we might call the academic precariat—people with master’s or even PhDs who are stuck working part-time for low pay, no benefits, and no job security.

These are the folks who teach your classes, grade your papers, and write your recommendation letters—while living paycheck to paycheck and often on government assistance. They’re the most educated people in the country—and many of them can’t afford basic needs.

Why does this happen? Because colleges don’t have to pay them fairly. There are more PhDs than full-time teaching jobs, so universities keep a huge pool of low-paid instructors they can use whenever they want. That’s called a “standing reserve” of labor—and it's incredibly profitable for institutions.

The Internship Trap

And then there are unpaid internships—another form of credential inflation. Now, just having a degree isn’t enough. You also need “experience.” But that experience is often unpaid, meaning students (and their families) cover the cost of working for free.

This second wave of credential inflation hits working-class students hardest. Many can’t afford to work unpaid jobs, pay rent, and take classes at the same time. So the system ends up rewarding privilege and punishing struggle—again.

And here’s the kicker: unpaid interns often don’t even get jobs. Studies show people who never interned sometimes do just as well—or better.

Is There Another Way?

You might be thinking: but aren’t degrees still worth it? Isn’t this just the way things work?

That’s exactly what the system wants you to believe. And while it’s true that some education leads to better job outcomes, it’s also true that the cost is rising faster than the benefit. And the system is rigged to keep you in debt no matter what.

So what can we do? First, question the system, not yourself. If you’re overwhelmed by debt or struggling to find a job, you’re not failing—the system is. Second, recognize that individual solutions—like working harder, studying longer, or networking more—won’t fix a structural problem. What we’re facing is a system that uses debt to control, not to educate.

Final Thought

Degrees should be tools for empowerment, not chains of obligation. But as long as education is tied to debt, exploitation, and ever-escalating credential requirements, it will remain part of a system designed to extract—not uplift.

It’s time to stop asking how can I survive this system and start asking why does this system exist at all?

Need Student Debtors to Provide Information about Low-Financial-Value Postsecondary Programs (Updated February 15, 2023)

 

[Editor's Note: The public comment period ended February 10, 2023.]  

The US Department of Education is accepting public comments as a Request for Information (RFI) about "Public Transparency for Low-Financial-Value Postsecondary Programs."  The announcement is available at the US Federal Register.  

The URL to make these comments is at 

https://www.regulations.gov/document/ED-2022-OUS-0140-0001

As with most US government rules and policies, industry insiders have great influence in these decisions--and concerned citizens are often shut out of the process. When consumers do have a chance to speak, they may not even know of those opportunities.  That's why the Higher Education Inquirer is asking student loan debtors to contribute to this RFI while they can.   

Tell DC policymakers and technocrats about your unique struggles (and your family's struggles) tied to student debt--and what could be done to better inform consumers like you. 

There you can find public comments that have already been made.  As of February 15, only 129 comments were posted. 

According to the announcement: 

"a misalignment of prices charged to financial benefits received may cause particularly acute harm for student loan borrowers who may struggle to repay their debts after discovering too late that their postsecondary programs did not adequately prepare them for the workforce. Taxpayers also shoulder the costs when a substantial number and share of borrowers are unable to successfully repay their loans. The number of borrowers facing challenges related to the repayment of their student loans is significant."  

The Request for Information continues...

"Programs that result in students taking on excessive amounts of debt can make it challenging for students to reach significant life milestones like purchasing a home, starting a family, or saving enough for retirement, ultimately undermining their ability to climb the economic mobility ladder. Especially for borrowers who attended graduate programs, debt-to-income ratios often rise well above sustainable levels. IDR (Income-Driven Repayment) plans also cannot fully protect borrowers from the consequences of low financial-value programs. For instance, IDR plans cannot give students back the time they invested in such programs. For many programs, the cost of students' time may be at least as significant as direct program costs such as tuition, fees, and supplies. Loans will also still show up on borrowers' credit reports, including any periods of delinquency or default prior to enrollment in IDR."

"The Biden-Harris Administration is committed to improving accountability for institutions of higher education. One component of that work is to increase transparency and public accountability by drawing attention to the postsecondary programs that are most likely to leave students with unaffordable loans and provide the lowest financial returns for students and taxpayers."

CECU, an group representing for-profit colleges, has an organized effort to protect its interests. 
 

Meanwhile, Robert Kelchen has provided an EXCEL spreadsheet that provides many answers. The dataset covers 45,971 programs at 5,033 institutions with data on both student debt and earnings for those same cohorts. We found more than 12,200 programs where debt exceeds income. And more than 7200 programs resulted in median incomes of less than $25,000 a year with debt greater than $10,000.

While some of these high-debt programs in medicine and law may eventually be profitable, many more paint a picture of struggle with a lifetime of debt peonage. Cosmetology schools had a large number of low-income programs.  But the fine arts, humanities, social sciences, and education also produced low-value programs in terms of debt to income ratio. 

Some of subprime schools HEI has been investigating (Purdue University Global, University of Arizona Global, The Art Institutes) had a number of low-value majors. But elite and brand name schools like Duke, Drexel, Emory, Syracuse, Baylor, DePaul, New School, and University of Rochester even have high debt and low-income programs. 

Related link:  I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

Related link: More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

Related link: The College Dream is Over (Gary Roth)

Related link: Even Elite Schools Have Subprime Majors (Keil Dumsch and Dahn Shaulis)

The Haves and Have Nots of Higher Education and Student Loan Debt

In a move that has raised eyebrows across Washington and beyond, President Donald Trump recently announced a plan to transfer the U.S. Department of Education’s vast student loan portfolio—totaling a staggering $1.8 trillion—to the Small Business Administration (SBA). This bold step is ostensibly designed to streamline the management of federal student loans, but it is also seen by many as the first move in a larger effort to dismantle the Department of Education entirely, reduce federal oversight, and privatize key aspects of the student loan system. Alongside this plan, there are growing discussions about eliminating essential borrower protections, including programs like Public Service Loan Forgiveness (PSLF), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and the Borrower Defense to Repayment program, all of which have offered critical relief to millions of students. Additionally, the rollback of Gainful Employment regulations—which were designed to protect students from predatory for-profit institutions—further signals a shift toward private sector control, which has historically benefited lenders over borrowers.

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The Alleged 'Rescue' of the Loan Portfolio

The White House has framed the transfer of the student loan portfolio to the SBA as a necessary step to relieve the Department of Education (ED) of a heavy burden, positioning the SBA as the new “caretaker” of the nation’s student debt. According to President Trump, the SBA—under the leadership of Kelly Loeffler—will now handle the $1.8 trillion student loan portfolio, while the Department of Education focuses on other key educational initiatives.

For some, the move seems like a fresh approach to a problem that has long plagued U.S. higher education: the overwhelming student debt crisis. However, a deeper look into the mechanics of the transfer suggests that this could be the first step toward a far more troubling goal: the dismantling of the federal student loan system and the privatization of debt, a shift that could harm millions of consumers in the process.

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The SBA’s Inexperience with Student Loans

The SBA, traditionally tasked with managing small business loans, lacks the expertise to effectively manage the complex structure of federal student loans, which include income-driven repayment plans, loan forgiveness programs, and various protections for struggling borrowers. With the agency also facing significant staffing cuts, it’s highly unlikely that the SBA will be able to competently handle such a vast and complicated portfolio—especially when 40% of these loans are already in default or behind on payments.

This raises an obvious question: is the SBA being set up to fail? Some insiders suggest that the failure of the SBA to properly manage the student loan portfolio could be deliberate—creating a crisis that would justify selling off the portfolio to private companies, thus privatizing the entire system.

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The Planned Failure: A Strategy for Privatization?

According to several former senior officials within the Department of Education, the transfer of the student loan portfolio to the SBA could be a calculated move to destabilize the federal loan system. The apparent failure of the SBA to manage the loans would then serve as a justification for transferring the loans to the private sector. This mirrors tactics used in other sectors where privatization was pursued under the guise of government inefficiency. The fear is that this move could ultimately lead to for-profit companies taking over the loan system, with borrowers facing higher interest rates, stricter repayment terms, and the loss of essential protections.

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Who Stands to Gain from Privatizing Student Loans?

The shift toward privatizing student loans stands to benefit several key players in the financial and educational sectors, particularly for-profit companies and private lenders who have long pushed for deregulation and profit-driven management of student debt. The primary beneficiaries would include:

1. Private Lenders and Financial Institutions: Banks, investment firms, and loan servicing companies are the most obvious winners in a privatized student loan system. With the federal government stepping back, these entities would gain control over the $1.8 trillion portfolio, allowing them to set higher interest rates, stricter repayment terms, and impose fees on borrowers. This would turn student loans into even more lucrative financial products for the private sector.

2. For-Profit Educational Institutions: For-profit colleges, which often rely on student loans to fund their operations, could also stand to gain. These institutions—many of which have faced significant scrutiny for high tuition costs and poor student outcomes—would benefit from a less regulated environment. Without the Gainful Employment regulations, which were designed to hold these institutions accountable for their job placement and earnings data, they would face fewer restrictions on their recruitment practices and financial dealings, potentially allowing them to continue enrolling students in expensive, low-quality programs.

3. Servicers and Debt Collection Agencies: Loan servicers and debt collection agencies that would likely take over the management of student loans in a privatized system stand to profit greatly. By controlling the servicing of student loans, these companies can increase their fees and aggressively pursue defaulting borrowers, further exacerbating the financial hardship for many students. These entities would benefit from a less regulated environment where the focus would shift toward profitability, often at the expense of borrowers.

4. Political Donors and Lobbyists: Financial institutions and for-profit education providers have historically been major political donors and lobbyists, particularly to policymakers who have pushed for deregulation of student loan systems. Privatization could provide these stakeholders with the opportunity to consolidate their power over the student loan industry, influencing policy decisions in their favor and ensuring continued access to profits from the student loan market.

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A History of Struggles: Lack of Oversight and Privatization Since the 1980s

The idea of privatizing student loans and dismantling federal oversight is not entirely new. In fact, the U.S. student loan system has been struggling for decades due to a lack of oversight and a trend toward privatization dating back to the 1980s. The federal government’s role as a guarantor of student loans—starting with the creation of the Guaranteed Student Loan (GSL) program in the 1960s—was eventually scaled back, leading to a rise in private student loans. As private lenders entered the student loan market, particularly during the 1990s and 2000s, the system became increasingly unregulated, leading to rising debt levels and predatory lending practices.

By the 1980s, the federal government’s reliance on private institutions to handle student loans led to a lack of transparency, accountability, and consumer protections. In particular, private lenders began to offer loans with fewer safeguards, contributing to the explosion of student loan debt and the proliferation of for-profit colleges that preyed on vulnerable students. The government, despite its involvement, increasingly stepped back from actively managing the loan system, leaving students with limited options for relief when they fell into financial distress.

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The Consequences of Deregulation: Elite Colleges and the Growing Educated Underclass

One of the most significant byproducts of the shift toward privatization and deregulation in U.S. higher education has been the growth of a growing educated underclass. While elite colleges have continued to thrive, expanding their endowments and increasing their tuition fees, a large segment of the population is left with a degree and overwhelming debt that fails to deliver on its promise. Over the past several decades, prestigious universities have only gotten wealthier, with many now sitting on endowments of billions of dollars. These institutions benefit from the student loan system, which allows students to take on more debt to afford high tuition costs, all while their wealthy alumni networks and expansive endowments only grow larger.

At the same time, a growing number of students from lower-income backgrounds—many of whom attend for-profit or underfunded public colleges—are graduating with significant debt and few prospects for stable, high-paying careers. This has created a growing “educated underclass,” where graduates with degrees struggle to find employment that pays enough to manage their loan repayment, further exacerbating wealth inequality.

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The Dangers of Future Issues: AI, Automation, and the Loss of Good Jobs

Looking to the future, the privatization of student loans and the increasing burden of student debt could be exacerbated by emerging technological shifts, particularly in the fields of artificial intelligence (AI) and automation. As industries evolve and more jobs become automated, many middle-class careers traditionally accessible to graduates may disappear or evolve into low-wage, low-security positions. This could lead to an even larger divide between the "haves" and "have-nots" in society, where only those with connections or elite educational backgrounds can secure stable, high-paying employment.

For students entering the workforce with massive student loan debt, this would present a troubling scenario where their ability to repay their loans becomes even more difficult as fewer well-paying jobs are available. This, in turn, would increase the financial strain on future generations of students who are already navigating a rapidly changing job market. For many, student loans could become an insurmountable barrier, keeping them trapped in cycles of debt that are impossible to escape.

Moreover, the increasing reliance on private companies to manage student loans, with their focus on profitability, could exacerbate these issues by offering fewer opportunities for income-driven repayment plans or relief options that account for the economic realities of an AI-powered, automation-driven economy. As the job market continues to shrink and evolve, the need for federal programs to support borrowers through tough economic times will only grow.

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The Impact of Eliminating Borrower Protections

The elimination of borrower protections—such as PSLF, PAYE, ICR, and Borrower Defense to Repayment—would significantly worsen the student loan crisis. Public Service Loan Forgiveness, for example, allows individuals working in essential public service careers to receive loan forgiveness after ten years of qualifying payments. Without this program, many public servants would face a lifetime of insurmountable debt. Similarly, income-driven repayment programs allow borrowers to repay loans based on their income, making it easier for those in low-paying fields to manage their debt.

The Borrower Defense to Repayment program provides vital relief to students who were defrauded by their institutions. Without strong enforcement of this program, students may have no recourse to seek relief from predatory schools. The rollback of Gainful Employment regulations could further expose students to the risks of attending for-profit institutions that fail to deliver on their promises.

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The Long-Term Fallout: A Dangerous Precedent

The long-term consequences of privatizing student loans could include exacerbating wealth inequality, widening the racial wealth gap, and creating an economic landscape where education debt is a permanent burden on a generation of students. If privatization moves forward, the financial burden of education will likely become a far more persistent and overwhelming problem, especially for those who can least afford it.

What’s particularly concerning is that in past crises, it’s the elites—wealthy colleges, financial institutions, and large corporations—that have consistently received the bulk of government bailouts. The same institutions that contribute the least to solving the country’s educational inequities continue to benefit from taxpayer-funded relief. If privatization moves forward, we cannot allow the same pattern to repeat itself. The majority of relief should go to those most burdened by student debt, not those who already have the means to navigate the system with ease.

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The Future of Higher Education Debt: A Call to Protect Federal Loan Programs

At the Higher Education Inquirer, we stand in full support of federal student loan forgiveness and repayment programs, including PSLF, PAYE, and ICR, as they offer essential pathways for borrowers, especially public service workers and low-income individuals. These programs provide vital relief to borrowers, allowing them to focus on their careers without the burden of overwhelming debt. We urge policymakers to protect, enhance, and expand these vital initiatives to ensure that education remains accessible and equitable for all.

As we continue to face challenges in higher education financing, it is crucial to learn from past mistakes and advocate for systems that prioritize the well-being of students, not profit. The proposed privatization of the student loan system threatens to undo decades of progress and burden future generations with lifelong debt. It is essential that we protect these programs and work toward a solution that prioritizes education and fairness over corporate interests.

Generation Z and the Fractured American Dream: Class Divide, Debt, and the Search for a Future

For Generation Z, the old story of social mobility—study hard, go to college, work your way up—has lost its certainty. The class divide that once seemed bridgeable through education now feels entrenched, as debt, precarious work, and economic volatility blur the promise of progress.

The new economy—dominated by artificial intelligence, speculative assets like cryptocurrency, and inflated housing markets—has not delivered stability for most. Instead, it’s widened gaps between those who own and those who owe. Many young Americans feel locked out of wealth-building entirely. Some have turned to riskier bets—digital assets, gig work, or start-ups powered by AI tools—to chase opportunities that traditional institutions no longer provide. Others have succumbed to despair. Suicide rates among young adults have climbed sharply in recent years, correlating with financial stress, debt, and social isolation.

And echoing through this uncertain landscape is a song that first rose from the coalfields of Kentucky during the Great Depression—Florence Reece’s 1931 protest hymn, “Which Side Are You On?”

Come all you good workers,
Good news to you I’ll tell,
Of how the good old union
Has come in here to dwell.

Which side are you on?
Which side are you on?

Nearly a century later, those verses feel newly urgent—because Gen Z is again being forced to pick a side: between solidarity and survival, between reforming a broken system or resigning themselves to it.

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The Class Divide and the Broken Ladder
Despite record levels of education, Gen Z faces limited social mobility. College remains a class marker, not an equalizer. Students from affluent families attend better-funded universities, graduate on time, and often receive help with housing or job placement. Working-class and first-generation students, meanwhile, navigate under-resourced campuses, heavier debt, and weaker professional networks.

The Pew Research Center found that first-generation college graduates have nearly $100,000 less in median wealth than peers whose parents also hold degrees. For many, the degree no longer guarantees a secure foothold in the middle class—it simply delays financial independence.

They say in Harlan County,
There are no neutrals there,
You’ll either be a union man,
Or a thug for J. H. Blair.

The metaphor still fits: there are no neutrals in the modern class struggle over debt, housing, and automation.

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Debt, Doubt, and the New Normal
Gen Z borrowers owe an average of around $23,000 in student loans, a figure growing faster than any other generation’s debt load. Over half regret taking on those loans. Many delay buying homes, having children, or even seeking medical care. Those who drop out without degrees are burdened with debt and little to show for it.

The debt-based model has become a defining feature of American life—especially for the working class. The price of entry to a better future is borrowing against one’s own.

Don’t scab for the bosses,
Don’t listen to their lies,
Us poor folks haven’t got a chance
Unless we organize.

If Reece’s song once called miners to unionize against coal barons, its spirit now calls borrowers, renters, adjuncts, and gig workers to collective resistance against financial systems that profit from their precarity.

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AI and the Erosion of Work
Artificial intelligence promises efficiency, but it also threatens to hollow out the entry-level job market Gen Z depends on. Automation in journalism, design, law, and customer service cuts off rungs of the career ladder just as young workers reach for them.

While elite graduates may move into roles that supervise or profit from AI, working-class Gen Zers are more likely to face displacement. AI amplifies the class divide: it rewards those who already have capital, coding skills, or connections—and sidelines those who don’t.

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Crypto Dreams and Financial Desperation
Locked out of traditional wealth paths, many young people turned to cryptocurrency during the pandemic. Platforms like Robinhood and Coinbase promised quick gains and independence from the “rigged” economy. But when crypto markets crashed in 2022, billions in speculative wealth evaporated. Some who had borrowed or used student loan refunds to invest lost everything.

Online forums chronicled not only the financial losses but also the psychological fallout—stories of panic, shame, and in some tragic cases, suicide. The new “digital gold rush” became another mechanism for transferring wealth upward.

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The Real Estate Wall
While digital markets rise and fall, real estate remains the ultimate symbol of exclusion. Home prices have climbed over 40 percent since 2020, while mortgage rates hover near 8 percent. For most of Gen Z, ownership is out of reach.

Older generations built equity through housing; Gen Z rents indefinitely, enriching landlords and institutional investors. Without intergenerational help, the “starter home” has become a myth. In America’s new class order, those who inherit property inherit mobility.

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Despair and the Silent Crisis
Behind the data lies a mental health emergency. The CDC reports that suicide among Americans aged 10–24 has risen nearly 60 percent in the past decade. Economic precarity, debt, housing insecurity, and climate anxiety all contribute.

Therapists describe “financial trauma” as a defining condition for Gen Z—chronic anxiety rooted in systemic instability. Universities respond with mindfulness workshops, but few confront the deeper issue: a society that privatized risk and monetized hope.

They say in Harlan County,
There are no neutrals there—
Which side are you on, my people,
Which side are you on?

The question lingers like a challenge to policymakers, educators, and investors alike.

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A Two-Tier Future
Today’s economy is splitting into two distinct realities:

• The secure class, buffered by family wealth, education, AI-driven income, and real estate assets.

• The precarious class, burdened by loans, high rents, unstable work, and psychological strain.

The supposed democratization of opportunity through technology and education has in practice entrenched a new feudalism—one coded in algorithms and contracts instead of coal and steel.

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Repairing the System, Not the Student
For Generation Z, the American Dream has become a high-interest loan. Education, technology, and financial innovation—once tools of liberation—now function as instruments of control.

Reforming higher education is necessary, but not sufficient. The deeper work lies in redistributing power: capping predatory interest rates, investing in affordable housing, curbing speculative bubbles, ensuring that AI’s gains benefit labor as well as capital, and confronting the mental health crisis that shadows all of it.

Florence Reece’s song endures because its question has never been answered—only updated. As Gen Z stands at the intersection of debt and digital capitalism, that question rings louder than ever:

Which side are you on?

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Sources

• Florence Reece, “Which Side Are You On?” (1931).

• Pew Research Center, “First-Generation College Graduates Lag Behind Their Peers on Key Economic Outcomes,” 2021.

• Dēmos, The Debt Divide: How Student Debt Impacts Opportunities for Black and White Borrowers, 2016.

• EducationData.org, “Student Loan Debt by Generation,” 2024.

• Federal Reserve Bank of St. Louis, Gen Z Student Debt and Wealth Data Brief, 2022.

• CNBC, “Gen Z vs. Their Parents: How the Generations Stack Up Financially,” 2024.

• WUSF, “Generation Z’s Net Worth Is Being Undercut by College Debt,” 2024.

• Newsweek, “Student Loan Update: Gen Z Hit with Highest Payments,” 2024.

• The Kaplan Group, “How Student Debt Is Locking Millennials and Gen Z Out of Homeownership,” 2024.

• CDC, Suicide Mortality in the United States, 2001–2022, National Center for Health Statistics, 2023.

• Brookings Institution, “The Impact of AI on Labor Markets: Inequality and Automation,” 2024.

• CNBC, “Crypto Crash Wipes Out Billions in Investor Wealth, Gen Z Most Exposed,” 2023.

• Zillow, “U.S. Housing Affordability Reaches Lowest Point Since 1989,” 2024.

Education Dept. Accused of Blocking Student Loan Forgiveness: A Systemic Failure

The American Federation of Teachers (AFT) has filed an amended complaint against the U.S. Department of Education and Secretary Linda McMahon, seeking class action status on behalf of millions of borrowers. The lawsuit alleges that the Department is unlawfully delaying or denying student loan forgiveness under income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF).

On paper, this is a fight about administrative backlogs and program freezes. In reality, it exposes how the U.S. higher education system continues to operate as a debt trap, where promises of relief are routinely broken, and working families are forced to subsidize a predatory credential economy.

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Debt as a Business Model

The Department of Education froze IDR processing for months, building a backlog that once stood at more than two million borrowers. Even after “restarting” the system, more than a million remain stuck. PSLF’s “Buyback” program alone is stalled with 74,000 unresolved cases.

These are not small bureaucratic hiccups—they are structural features of a system designed to delay cancellation for as long as possible. Borrowers who have made 20, 25, or even 30 years of payments are told to keep paying while they wait for forgiveness that may never come. Refunds are promised but often months away. Meanwhile, loan servicers continue to collect billions in revenue from a population already ground down by decades of repayment.

This isn’t simply mismanagement. It’s debt peonage, engineered by policymakers who present repayment as a civic duty while ensuring that the cycle of indebtedness continues.

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The Human Cost

The lawsuit documents borrowers choosing between student loan payments and medical care, postponing life decisions like marriage or homeownership, and even contemplating bankruptcy. Beyond the financial harm, there is profound psychological damage—stress, sleeplessness, and a deepening sense of betrayal by a government that promised relief in exchange for decades of faithful repayment.

The looming “tax bomb” magnifies the crisis. Unless forgiveness is processed before January 1, 2026, discharged balances under IDR will once again be taxable income. That means borrowers who finally achieve cancellation could be hit with crushing IRS bills. Congress has already acted to expand eligibility under the “One Big Beautiful Bill Act,” but the Department continues to deny applications based on rules that no longer exist.

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Historical Parallels: A Long Tradition of Debt Betrayal

The student debt crisis is only the latest in a series of American debt struggles where relief was promised but strategically withheld:

• Farm Debt in the 1980s: Family farmers were told federal programs would help restructure loans. Instead, banks and agencies delayed, forcing foreclosures that devastated rural America.

• The GI Bill’s Unequal Promise: While the GI Bill created new opportunities, Black veterans were systematically denied benefits through local gatekeeping. Access existed in theory but was obstructed in practice.

• The Mortgage Crisis of 2008: Homeowners seeking modifications found banks losing paperwork, delaying applications, and profiting from continued payments—an eerie echo of today’s student loan servicing delays.

Each moment reflects the same pattern: debt relief as rhetoric, obstruction as reality.

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A System Rigged to Fail Workers

The AFT’s legal filing is narrowly focused on the Administrative Procedure Act, accusing the Department of unlawfully withholding benefits and acting arbitrarily. But the larger structural truth is clear: the U.S. economy relies on debt as a mode of governance.

Student debt now exceeds $1.6 trillion. Universities raise tuition, Wall Street profits from securitized loans, and loan servicers pocket fees from keeping borrowers in repayment limbo. Meanwhile, adjunct professors earn poverty wages, and graduates face underemployment that makes repayment impossible. Higher education is no longer a ladder to the middle class—it is a system of extraction.

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Looking Ahead: 2027 and Beyond

Even if courts intervene before the 2026 tax deadline, borrowers face another looming threat: the 2027 austerity cuts, including deep reductions in Medicaid.

For working families, this collision will be devastating. Many borrowers already choose between student loan payments and medical care. When Medicaid cuts hit, tens of millions will lose access to basic health coverage. The financial vise will tighten: loan payments on one side, healthcare costs on the other. The most vulnerable—low-income borrowers, caregivers, the disabled—will be left with no safety net.

In this light, the Department’s refusal to process loan forgiveness is not just bureaucratic delay. It is part of a broader austerity regime that disciplines workers through debt, strips away public benefits, and reinforces a permanent underclass of the indebted.

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What’s at Stake

The AFT is asking the courts to compel the Department to process long-overdue discharges. Hearings are expected this fall, with a ruling possible before year’s end. But even if the courts side with borrowers, the deeper crisis remains: a political economy that treats debt not as a temporary burden but as a permanent condition of American life.

For borrowers, this case is about more than loan forgiveness. It is about whether the U.S. will continue its long tradition of promising relief while delivering betrayal—or whether working families will finally break the cycle of debt dependency before the coming wave of austerity in 2027 makes it even harder to escape.

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Sources

• American Federation of Teachers, Amended Complaint Against Department of Education (2025)

• U.S. Department of Education, IDR and PSLF Program Guidance

• The College Investor, “Education Dept. Accused of Blocking Student Loan Forgiveness” (2025)

• Michael Hudson, Killing the Host (2015)

• Maurizio Lazzarato, The Making of the Indebted Man (2012)

• Elizabeth Warren, The Two-Income Trap (2003)

• Bruce J. Schulman, The Seventies (2001)

Let’s Pretend We Didn’t See It Coming...Again

In the shadow of soaring tuition, crumbling public trust in higher education, and rising economic precarity, there lies a deeper and more structural crisis that rarely garners full public scrutiny: the massive and interconnected towers of global debt, financial speculation, and inflated asset prices. These are not just accounting numbers or Wall Street abstractions. They define the future economic prospects of students, working families, and institutions alike.

The Student Debt Crisis: A Generation in Chains

The U.S. student loan burden exceeds $1.7 trillion, with over 43 million borrowers caught in a slow-motion crisis. What was once framed as an “investment in the future” now shackles millions with little promise of upward mobility. Borrowers who never completed their degrees, disproportionately women and people of color, face default and damaged credit for pursuing what society told them was the American Dream.

Structural reform remains elusive. Meanwhile, for-profit and online colleges—backed by venture capital and private equity—have turned education into a high-yield debt machine, targeting vulnerable populations with aggressive marketing and poor outcomes.

Corporate Debt: Risk Hidden in Plain Sight

Less visible but equally dangerous is the mountain of corporate debt, especially in the United States. Nonfinancial corporate liabilities stood at $13.7 trillion by the end of 2024, with nearly $11.2 trillion in bonds alone. Globally, corporate bond markets exceed $35 trillion, fueled by cheap borrowing in the 2010s.

Now, with interest rates higher and consumer demand uneven, the refinancing of this debt poses real risk. The so-called “zombie corporations”—firms that can barely cover interest payments—continue to proliferate. Many of these companies exist not to innovate or produce value, but to service debt and enrich shareholders and executives through buybacks and dividends. If the cost of borrowing rises further or economic conditions deteriorate, defaults could ripple across the economy.

Real Estate: The Price of Shelter Becomes a Crisis

Add to this the relentless surge in real estate prices, and the picture grows even more distorted. Over the last decade, home prices have outpaced income growth in most U.S. cities. The median home price now hovers near $420,000, with affordability reaching historic lows for younger buyers and renters.

Much like student loans, housing has been sold as a path to security—yet that security has become increasingly speculative. Real estate, once tied to the fundamentals of shelter and location, is now driven by institutional investors, foreign capital, and short-term rental platforms. As interest rates rise, many homeowners are “locked in” by low mortgage rates, further tightening supply and inflating prices.

Meanwhile, rent burdens grow heavier, particularly for younger Americans already saddled with student debt. The dream of homeownership is becoming a fantasy for a generation priced out by financialization, debt servitude, and institutional hoarding of housing stock.

Derivatives: A Colossal Casino with Limited Visibility

Above and beyond tangible debt instruments, the global financial system is entangled in a derivatives market with a notional value of more than $700 trillion. While the actual at-risk value (gross market value) is closer to $12 to $15 trillion, this market remains opaque, concentrated in the hands of a few major banks and financial institutions.

Derivatives tied to interest rates, currencies, and credit risk can provide stability—or amplify chaos. Despite regulatory reforms after the 2008 financial crisis, significant exposure still exists outside the purview of public accountability. The collapse of one key counterparty or the mispricing of a large position could trigger a systemic event, especially in an economy already weighed down by interconnected liabilities.

Cryptocurrency Speculation: Financial Innovation or Digital Tulipmania?

Add to this volatile mix the rise and decline (and rise again) of speculative cryptocurrencies, which at their 2021 peak reached a market capitalization of over $3 trillion, before crashing and partially rebounding. While blockchain technology may hold potential, the crypto economy—driven by memes, manipulation, and venture-funded hype—has largely functioned as an unregulated financial casino.

Retail investors, including young people and students, were encouraged by social media and celebrity endorsements to "HODL" assets like Bitcoin, Ethereum, and countless “altcoins.” Many suffered significant losses, with little to no recourse. Yet crypto continues to draw institutional interest and remains deeply entwined with tech capital and libertarian ideology—especially among Silicon Valley’s elite.

A System Built on Fragility

Taken together, these layers of financial risk—student debt, corporate borrowing, real estate bubbles, derivatives, and speculative crypto markets—form a fragile scaffold upon which the broader economy, including the higher education system, rests. When one pillar shakes, the others reverberate.

In this climate, universities are not just victims—they are participants. Many rely on debt financing, engage in financial derivatives, invest endowments in risky markets, and partner with speculative online education companies backed by venture capital. Meanwhile, they continue to promote a narrative of educational ROI (return on investment) that looks increasingly outdated and unethical in light of the risks young people are forced to assume.

What Comes Next?

As global financial risks mount and faith in higher education erodes, the U.S. faces a critical juncture. Will it address these underlying structural instabilities, or continue down a path of compounding debt and speculation?

Without systemic reform—in education, housing, finance, and economic policy—students and workers will remain trapped in an exploitative cycle, and the broader economy will lurch from one crisis to the next. It's time to stop pretending these risks are isolated. They are interwoven. And they are unsustainable.

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The Higher Education Inquirer will continue to investigate these intersections of finance, education, and inequality in the months ahead.

Growing Up Later, Paying Longer: How Extended Adolescence Deepens the Student Loan Crisis

Recent neuroscience is challenging everything we thought we knew about adulthood. A landmark study from the University of Cambridge finds that our brains remain in an “adolescent” phase until around age 32. During this extended period, the brain undergoes major structural rewiring, improving connectivity, executive function, and decision-making. In other words, young adults in their 20s and early 30s are still biologically refining the very skills society expects them to rely on for financial independence.

Yet economic realities tell a different story. In the United States, the average college graduate carries over $30,000 in student loan debt, with repayment often starting immediately after graduation. For students pursuing graduate or professional school — law, medicine, business, or PhDs — debt often doubles or triples, and repayment is further delayed, sometimes beginning in the late 20s or early 30s. This period coincides precisely with the brain’s extended adolescent development phase, when executive function, risk assessment, and long-term planning are still maturing.

For many working-class students, this biological-economic mismatch is compounded by trauma and systemic inequality. Students from lower-income families may enter college already carrying family debt, needing to work multiple jobs, or facing housing insecurity. Borrowing to attend graduate school can trigger stress responses in the brain, affecting decision-making, emotional regulation, and risk assessment at a time when these very circuits are still developing. Early-life adversity, including exposure to poverty, unstable housing, or family stress, can alter brain development and magnify the challenges of managing debt during the extended adolescent phase. The combination of prolonged brain maturation, massive student debt, and class-based stressors can increase anxiety, depression, and burnout, especially for first-generation and working-class students who may lack generational financial knowledge.

Graduate education intensifies these pressures. Graduate students often juggle heavy workloads, research obligations, and living costs while navigating large financial obligations at a developmental stage where executive functions are still stabilizing. High debt and extended schooling push milestones such as homeownership, family formation, and career stability into the early-to-mid 30s, overlapping with the final phase of brain maturation. For working-class students, who often have fewer safety nets, financial missteps or delayed income can be more consequential and stressful, amplifying the inequities embedded in higher education financing.

Addressing student loan burdens requires policies that recognize both neurodevelopmental science and socioeconomic realities. Repayment programs that delay full payments until the late 20s or early 30s would reduce stress during a critical brain development window. Income-contingent or progressive repayment plans can scale obligations with early-career earnings, particularly for graduate students carrying high debt burdens. Financial literacy and counseling programs must also integrate trauma-informed support, teaching budgeting and debt management while recognizing the emotional impacts of financial stress. Mental health resources should be accessible for students navigating the combined pressures of debt, class-based disadvantage, and developmental transitions. Systemic reform in higher education financing, including expanded grants, debt-free programs, fellowships, and living stipends, would reduce structural disadvantages for working-class students and support more equitable access to higher education.

Prolonged adolescence reframes the student debt crisis, particularly for graduate students and working-class borrowers. Our brains continue to mature into the early 30s, yet financial systems demand fully developed decision-making skills much earlier. For students from lower-income families, this gap is widened by trauma, structural inequality, and fewer safety nets. To support healthy, resilient, and economically secure generations, policymakers must recognize that growing up biologically and psychologically takes longer than society allows, and that debt obligations should not compound trauma or class disadvantage. Aligning financial policy with developmental science and social equity is not just fair — it is essential.
Sources


University of Cambridge. “Five Lifespan Phases of Brain Development Revealed by MRI Study.” Nature Communications, 2025. https://www.cam.ac.uk/stories/five-ages-human-brain


MSN / Independent. “Adolescence Lasts into Your 30s, Major New Study Finds.” 2025. https://www.msn.com/en-us/health/other/adolescence-lasts-into-your-30s-major-new-study-on-brain-finds/ar-AA1R9uhF


Arslan, S., et al. “Modular Segregation of Structural Brain Networks Supports Executive Function in Youth.” NeuroImage, 2016. https://arxiv.org/abs/1608.03619


Bethlehem, R.A.I., et al. “Preferential Detachment During Human Brain Development: Age- and Sex-Specific Structural Connectivity in DTI Data.” 2014. https://arxiv.org/abs/1404.0240


Aljazeera. “Does Adolescence Last Until 32? Scientists Unlock Brain’s Five Eras.” 2025. https://www.aljazeera.com/news/2025/11/26/does-adolescence-last-until-32-scientists-unlock-brains-five-eras


U.S. Federal Reserve. “Report on the Economic Well-Being of U.S. Households: 2025.” https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households.html

The Political Development of American Debt Relief (Debt Collective)

 As 2024 is coming to an end we wanted to flag a few upcoming calls happening for you to join.

The Political Development of American Debt Relief
8 p.m. ET Thursday, Dec 12

Governments at all levels have begun to experiment with various forms of debt relief, first during the covid-19 pandemic and now in a bid to mobilize Democratic voters. The recent Supreme Court decisions overturning Biden’s student loan forgiveness and rejecting the CDC’s eviction moratorium may suggest that these forays into debt relief were new and perhaps even impermissible, but this form of politics was a regular feature of American life from the Founding through the Great Depression. We will discuss what lessons we can draw from past periods of debtor mobilization, to help us understand when debtors are likely to succeed in shaping the law and understand how new demands for debt relief are impacting politics today.

Join Debt Collective and authors Emily Zackin and Chole N. Thurston for a conversation about their book, The Political Development of American Debt Relief.

REGISTER

New to the Debt Collective? Join our new member call: 8 p.m. ET Thursday, December 19 Learn about the areas the Debt Collective is currently organizing around, from medical debt, to housing and student debt and more. Find out how to plug-in. REGISTER

March Update on Student Debt (Debt Collective)

The federal government is a sh*t show right now. From ICE abductions of pro-Palestine college students to proposed cuts to Social Security and Medicaid, the Trump administration is wreaking havoc on all of our communities.

We want to take a moment and specifically talk about student debt and higher education — work that we’ve been doing for a while now. Here’s some of what we know, what we think, and what we should do:

In recent days, the Trump administration issued an executive order to dismantle the Department of Education. Legally, this cannot be done without Congress, but in practice, this means most of the staff was simply fired. We talked a little bit about what that means for student debtors in this Twitter thread. In short, this makes the student debt crisis much worse.

Shortly after that, Trump ordered the entire federal student debt portfolio — all $1.7 trillion — to be moved from the Department of Education to the Small Business Administration (SBA). The Small Business Administration is another agency within the federal government. That means our collective creditor would still be the federal government. But will this move actually happen? Will our federal student loans somehow end up privatized? There is a LOT up in the air right now, and the short answer is we don’t know exactly what will happen, but we as debtors should remain nimble so we can exercise our collective power when we need to. Moving our student debt from the Department of Education to the SBA would be 1) illegal 2) administratively and practically difficult 3) lead to possible errors with your account.

If you haven’t already, we still highly recommend going to studentaid.gov and finding your loan details and downloading and/or screenshotting your history.

The traditional infrastructure we have long suggested debtors utilize to solve problems with their student debt — the Consumer Financial Protection Bureau (CFPB), the FSA ombudsman team, etc — have either been undermined or outright destroyed. This means there are fewer and fewer ways for us, student debtors, to get answers to problems with our student debt accounts. But we shouldn’t let Congress off the hook — we should make student loans Congress’ problem. They’re elected to serve us and it’s their job to attend to your needs.

Our friends at Student Borrower Protection Center (SBPC) have put together a helpful tool to open a case at your member of Congress’s office.

Lastly, we want to talk about what we mean when we say Free College. Student debt has ruined lives, and will continue to as long as it exists. We shouldn’t have to borrow to pay for college — in fact, we shouldn’t have to pay at all. It should be free. And that’s what we’re fighting for. But our vision for College For All doesn’t stop at tuition-free — it means ICE and cops off campus; it means paying workers, faculty and staff a living wage; it means standing up for free speech; it means ending domestic and gender based violence on campus; and it means universities that function as laboratories for democracy and learning, not as laboratories for landlords and imperialism.

On April 17th, Debt Collective is co-sponsoring the National Higher Education Day of Action to demand our vision of College For All and oppose the hell the Trump administration is causing right now. Find an event near you HERE to participate — or start an event on your own!

And THIS SATURDAY – April 5th –we’re taking to the streets with hundreds of thousands of people across the country to tell Trump and Musk “Hands Off Our Democracy!” They’re stripping America for parts, and it's up to us to put an end to their brazen power grab. This will be one of the largest mass mobilizations in recent history — and we need you in the streets with us. There are hundreds of actions planned, find one to join near you HERE.

Whatever happens in the future, we will be more likely to win if we gird ourselves with each other’s stories and experiences so we can fight together. This is why we built a debtors’ union — the only virtual factory floor for debtors. Debt acts as a discipline and keeps people from joining the struggle for things we care about — but we can increase our numbers and build power by canceling unjust debts. We all share the same creditor and we need to stay connected to one another. Forward this email to a friend or family member and tell them to join the union and our email list so we can stay connected.

In Solidarity,

Debt Collective

Examining the Debt and Earnings of “Professional” Programs (Robert Kelchen)

 [Editor's note: This article first appeared in the Robert Kelchen Blog.] 

Robert Kelchen Read on blog or Reader Examining the Debt and Earnings of “Professional” Programs By Robert on November 10, 2025 Negotiated rulemaking, in which the federal government convenes representatives of affected parties before implementing major policy changes, is one of the wonkier topics in higher education. (I cannot recommend enough Rebecca Natow’s book on the topic.) Negotiated rulemaking has been in the news quite a bit lately as the Department of Education works to implement changes to federal student loan borrowing limits passed in this summer’s budget reconciliation law. Since 2006, students attending graduate and professional programs have been able to borrow up to the cost of attendance. But the reconciliation law limited graduate programs to $100,000 and professional programs to $200,000, setting off negotiations on which programs counted as “professional” (and thus received higher loan limits). The Department of Education started with ten programs and the list eventually went to eleven with the addition of clinical psychology. In this short post, I take a look at the debt and earnings of these programs that meet ED’s definition of “professional,” along with a few other programs that could be considered professional but were not. Data and Methods I used program-level College Scorecard data, focusing on debt data from 2019 and five-year earnings data from 2020. (These are the most recent data points available, as the Scorecard has not been meaningfully updated during the second Trump administration. Five-year earnings get students in health fields beyond medical residencies. I pulled all doctoral/first professional fields from the data by four-digit Classification of Instructional Programs codes, as well as master’s degrees in theology to meet the listed criteria. Nine of the eleven programs had enough graduates with debt and earnings to report data; osteopathic medicine and podiatry did not. There were five other fields of study with at least 14 programs reporting data: education, educational administration, rehabilitation, nursing, and business administration. All of these clearly prepare people for employment in a profession, but are not currently recognized as “professional.” Key takeaways Below is a summary table of debt and earnings for professional programs, including the number of programs above the $100,000 (graduate) and $200,000 (professional) thresholds. Dentistry, pharmacy, and medicine have a sizable share of programs above the $100,000 threshold, while law (the largest field) has only four of 195 programs over $200,000. Theology is the only one of the nine “professional” programs with sufficient data that has higher five-year earnings than debt, suggesting that students in other programs may have a hard time accessing the private market to fill the gap between $200,000 and the full cost of attendance. On the other hand, four of the five programs not included as “professional” have higher earnings than debt, with nursing and educational administration being the only programs with sufficient data that had debt levels below 60% of earnings. More than one-third of rehabilitation programs had debt over the new $100,000 cap, while few programs in other fields had that high of a debt level. (Education looks pretty good now, doesn’t it?) I expect the debate over what counts as “professional” to end up in courts and to possibly make its way into a future budget reconciliation bill (about the only way Congress passes legislation at this point). Until then, I will be hoping for newer and more granular data about affected programs.