Almost 10 years after the 2007 economic crisis, another debt bubble is ready to burst. Experts say student loan debt, the second highest form of household debt at $1.5 trillion, is a risk to our economic stability.
Instead of solving this issue, the current administration and its allies in Congress are ignoring affordable higher education funding to pass another round of top-heavy tax cuts less than a year after their historic $2 trillion payoff to donors.
In the short amount of time that Trump has been in office, the future of the Pell Grant program has grown more precarious than ever before. Pell Grants are one of the few forms of financial aid that do not need to be paid back. They are need-based, and every year more than 5 million students rely on them to afford higher education.
Earlier this year, Trump’s federal budget proposed freezing the maximum Pell Grant amount, guaranteeing the value would continue to erode in the coming decade as tuition costs keep climbing.
In 1975, the program covered almost 80 percent of the cost of attendance of a four-year college. Now, it covers just 30 percent.
Rather than occupy themselves with revamping the Higher Education Act (a remnant of LBJ’s Great Society that increased federal funding, and created scholarships and low-interest rates for students) or giving the Debt-Free College Act introduced by Sen. Schatz (HI) a fair shake (his legislation would introduce a voluntary partnership between states and the federal government to ensure the total cost of attending college results in zero debt for students), Republicans have passed tax cuts for the wealthy.
By doing so, they chose not to raise the standard of living and quality of life for Americans who need the most help. Instead, the 2017 tax bill’s retention of the pass-through loophole further entrenches wealth inequality, making higher education even more of a necessity for the working class to attain partial economic stability.
Originally, the pass-through filing status was created to help small business owners by allowing them to pass their business’s profits over to themselves for a lower marginal rate. However, due to the language of the tax code, only 10 percent of people claiming pass-through income are actually small business employers. In last year’s tax bill, Republicans kept this loophole open, and added a 20 percent deduction. This single provision will add $60 billion to the national deficit by 2021.
With a second round of tax cuts making its way out the House, it’s imperative that the American people make clear their priorities by voting in the midterms. As someone who has been economically fortunate, and who will become wealthier because of the Republican tax cuts, I’m well-insulated from the effects of student loan debt and Pell Grant cuts.
What concerns me, though, is the collective blow to society should another round of tax cuts make its way to Trump’s desk. The student loan debt bubble will hurt households with and without debt, with and without college graduates. This understanding of the economy is, in part, what caused me to change my party affiliation from Republican to Democrat almost two decades ago — because one party cares about the collective good more than donors’ bottomline.
For the improved future of our country, our children need access to affordable education after high school. This requires an investment in and greater access to Pell Grants and other forms of financial aid. Republicans in Congress think otherwise, and have legislated with wealthy donors in mind, not working class families. It’s on us to elect politicians committed to a fairer tax code — one that enables us to provide adequate funding for all students, whether poor, middle class or wealthy.