Over 40 million Americans are still paying off their college degrees. The average graduate owes $37,000. That burden undermines the very “stability,” “dynamism” and “community-building” that their degrees were meant to foster. Student debt reduces lifetime wealth — by $208,000 for an average household — as people are forced to make payments instead of saving for retirement or buying homes. It affects career and job selection (people are less likely to start a small business or take a low-paying public interest job), the decision to start a family, and the ability to save for emergencies. The psychological strain of living in debt can lead to lower overall well-being.
What’s more: Student debt has wide economic and social ramifications, reducing economic mobility across the board, and hitting African Americans and Latinos particularly seriously. Student loan debt presents both a deeply personal and profoundly social challenge for this country.
Alums can help ease that struggle by giving money directly to peers, creating a network of collective debt relief that can help unburden individuals while influencing policymakers and university administrators.
There’s already some precedent for this kind of collective action. In June, John Oliver bought and forgave $15 million in medical debt. The stunt was a version of the Rolling Jubilee, a project of Strike Debt, which used contributions to a central fund in order to abolish almost $32 million in debt, before concluding at the end of 2013.
Though both projects took advantage of secondary markets that exist for non-student debt to buy debt at pennies on the dollar, they demonstrate one way to distribute the benefits across a wide swath of debt holders. For student debt, Web contributions to one national fund could be paid out to individuals through a selection process, at random, or distributed evenly across applicants.
On an individual level, we could create a debt funding system building off project-based crowdfunding sites, such as Indiegogo and GoFundMe, or the subscription donation platform Patreon. Perhaps the most promising approach is most fitting to the ethos of alumni giving: using crowdfunding to coordinate graduation class debt-relief collectives. A central page could solicit donations and disburse monthly sums to debt holders from a graduating class. A special emergency fund could help prevent individual peers’ default.
The motivations that animate alums to give in the first place — fondness of their university experience — often depend on the peers that made that experience possible. Easing the daily stress of former classmates, or even achieving a debt-free graduated class, would be the most sensible way to “give back.”
Of course, there are some technical and administrative hurdles — organizing a payment infrastructure, maintaining compliance with relevant laws and collection practices, ensuring donations reach debt payments. But this isn’t any more complicated than the glut of start-ups that navigate the world of e-commerce and finance.
And no, this new direction is not a cure: Paying off debt isn’t the same as cutting off the source. In fact, debt abolitionists would argue that it would simply perpetuate the cozy syndicate of universities, government, and private loan makers. But granting temporary relief to a peer is not counter to the cause of reforming American university funding, spending and pricing. It can strengthen it. Fewer donations would certainly get administrators’ attention, and, if not, calls from alums now personally invested in debt relief efforts could help stop the problem at the source.
Connecting donors and debtors could also offer an unprecedented lobbying approach to elected officials in charge of higher education rules and funding.
Since that summer missive, I’ve paid special attention to the emails and letters I get from my alma mater. They’re from important people I never knew, brag about new buildings I’ve never seen and programs I didn’t have, and request support for students I’ve never met.
Despite my own payments, I wonder what I’d think if, instead, I received an email describing the situation of a former student or classmate: the looming weight of their next payment, the extra jobs they’ve taken, and ambitions put on hold to pay for their, or our, educational experience. I think I, and friends across income brackets, would have a harder time ignoring it.