How the Democrats Got Radicalized on Student Debt

In just over a decade, Democratic Party leaders have gone from advocating modest increases in Pell grants to pushing for large-scale debt cancellation.

Kelly Bell / Diego G Diaz / Shutterstock / The Atlantic

The presidential-election cycle has barely begun but one thing is already clear: The Democratic candidates want to talk about student debt. No surprise there; the trillion-dollar student-loan bubble has captured the national imagination in ways few higher-education issues have, and candidates are essentially obligated to have a plan to address it.

But what is surprising—how quickly we forget—is just how recent a development this is. When Barack Obama was simply a senator running for the Democratic nod in 2008, the conversation around student debt and college affordability looked different—very different.

Just a dozen years ago, Democratic hopefuls such as Joe Biden, Hillary Clinton, and Obama kept their proposals limited. Biden wanted to increase the Pell grant, a federal grant for low-income students, by $300 a year; Clinton similarly pushed to increase the maximum. “The first bill Barack Obama introduced in the U.S. Senate would have helped make college more affordable for many Americans by increasing the maximum Pell grant from the limit of $4,050 to a new maximum of $5,100,” a fact sheet released by the Obama campaign read. The candidates also pushed to make a switch in how student loans were disbursed. The government, not private banks, they argued, should be the entity distributing federal student loans.

John Edwards, who was then the Democratic Party’s most left-flank candidate, proposed making one year of college free for “qualified students.” His plan included a work requirement, and students would have had to complete a college-prep curriculum and “stay out of trouble.” It was, at the time, radical.

Meanwhile, other candidates did not even have particularly fleshed-out higher-education policies at all. Dennis Kucinich, for example, simply issued a statement saying that he would “provide universal education to all Americans from pre-school through college.” (John McCain, who would ultimately become the Republican candidate, did not issue any statements on student aid until three months before the general election.) Student debt had yet to secure its position in the national zeitgeist, and the candidates’ policies reflected that.

By today’s standards, these proposals are peripheral, small-scale interventions that are simply no match for the debt people are dealing with. The higher-education proposals the Democratic candidates are rolling out today are aggressive. There’s Elizabeth Warren’s plan to cancel—yes, completely cancel—the majority of borrowers’ student debt. Bernie Sanders says he will make college tuition-free. Julián Castro is pushing to fundamentally reform how student debt is repaid. It’s remarkable, really, that in such a short time, Democrats have gone from proposing relatively modest tweaks to advocating a wholesale reimagining of higher education’s economics. This shift isn’t the direct result of a Democratic Party moving leftward—though that may play a role—but it is fundamentally rooted in something much more concrete, and much more pervasive: the exploding scale of the problem.

Julie Peller has a chart on a wall in her office in Washington, D.C., a relic of sorts from her time on Capitol Hill as an adviser to the U.S. House Committee on Education and Labor. It’s a useful cheat sheet she referred to when I asked her about the push among Democratic candidates ahead of the 2008 election to increase the maximum Pell amount, but it’s also a reminder that things were simpler then—even if they were technically complicated.

In January 2007, just a shade over six months after Peller, now the executive director of the education-policy nonprofit Higher Learning Advocates, joined the committee’s staff, the House passed a spending bill that gave Pell its first boost since 2003. Pell grants, created in 1972, are funds intended to form the foundation of the financial-aid package for low-income students, and do not have to be repaid. “In 2003, it had a $50 increase, and then it was flatlined at a maximum of $4,050 until 2007,” Peller pulled from the chart. The 2007 bill gave Pell a $260 boost—increasing the maximum to $4,310, and that was significant. “The purchasing power of Pell had really decreased by staying flat and tuition prices going up,” Peller said. “And there was a thought that it was overdue for an increase because it had been essentially flatlined for at least five years.”

Democrats would tuck away the messaging about the grant’s purchasing power as debates about Pell evolved over the next several years. But before they could have that conversation, there was another, more pressing matter. Pell covered only a piece of education for only a slice of the public—low-income students. And often, students were turning to private-industry loans to pay for the rest. At the federal level, public pressure to reform the student-loan industry was becoming unavoidable.

Since 1965, the federal government had provided subsidies to banks such as Sallie Mae to lend money to students. The program, called the Federal Family Education Loan (FFEL) Program, was a regular whipping post for Democrats. They wanted to switch to something different—direct lending to students from the federal government—and several of the 2008 presidential candidates, including Obama, Clinton, and Biden, made doing so a foundation of their higher-education platform.

“I can’t overstate the extent to which the fight over direct lending versus FFEL really sucked up all the oxygen,” Ben Miller, the vice president of postsecondary education at the Center for American Progress, a liberal think tank, told me. It was hard, he said, to have any other conversation about completion (whether students who enroll in college eventually graduate) or affordability “while people were fighting about the best way to issue a federal student loan.”

Getting rid of bank-based lending would have served a dual purpose: By eliminating the subsidy for banks, it would have freed up money to increase the maximum size of Pell grants and the number of them that were disbursed. And students would need the extra Pell money.

President Obama was air-dropped into a crisis when he was sworn into office. A recession had hit, and it was changing the ways Americans lived, worked, and, as it would happen, went to college. Enrollments exploded at state universities, private colleges, and for-profit colleges—and so did the number of Pell recipients. From 2006 and 2011, total college enrollment grew by 3 million, according to the U.S. Census Bureau. Two-year-college enrollments grew by 33 percent during that same time.

Meanwhile, state funding for universities began shrinking dramatically. At the peak of the recession, state appropriations per student were down, on average, more than 13 percent, which meant colleges relied more heavily on tuition for revenue. That, in turn, meant that students had to pay more for their education, at the precise moment they had less money to do so. And middle- and high-income students who could no longer borrow on their parents’ home-equity lines to pay for college turned to bank-based student loans. “If you just look at the trends in borrowing from the pre- to postrecession, it’s a massive swing,” Miller said. “We added millions of [student] borrowers so quickly.”

By 2010, after the recession had ended and the economy had begun to pick up again, President Obama had moved on to more proactive legislation: namely, his campaign promise to get rid of bank-based lending to students, and to replace it with direct loans from the federal government. In March of that year, he succeeded. Congress approved an overhaul of the student-loan system, barring private banks from issuing loans with federal money, implementing a federal-lending program, and, as The New York Times put it, “ending one of the fiercest lobbying fights in Washington.” Ending that fight meant higher-education policy makers could think about the next one.

By March 2011, the administration was looking for its next big thing in higher education, and it had its eyes on affordability. That’s when Zakiya Smith Ellis, who now serves as the secretary of education for the state of New Jersey, joined the White House as a senior policy adviser. “The president was wondering: How do we actually make a dent in this?” she recalls. “You’re not going to get there by only focusing on increases to Pell.”

The initial results of the administration’s efforts focused on transparency. It launched the College Scorecard, which lets students compare costs of institutions, and created the Financial Aid Shopping Sheet, now known as the College Financing Plan, a tool designed to more clearly show students what their financial-aid packages would look like.

The 2012 election had few higher-education fireworks, partly because when politicians run for reelection, they run on their record. President Obama focused on increases to Pell, the switch to direct lending, and changes to income-driven repayment of loans. It was messaging that connected with voters because it was simple, Smith Ellis told me. “If you don’t earn that much, you don’t have to pay that much. That makes so much sense,” she said. “Simplicity matters when you’re talking about politics to people… If people can’t explain it, then they don’t understand what your policy is and what it does to them in a very clear way.”

As politicians were trying to suss out a clear way of addressing student debt, it was growing. By 2013, the student-loan portfolio had reached $1 trillion, and it was rising rapidly. This was not a result of Obama-era policies, but rather the natural outcome of 3 million additional students who were borrowing more money as states were spending fewer and fewer dollars on higher education.

What the federal government was struggling with, some state and local leaders were addressing. Across the country, a handful of state and local governments had been creating “college promise,” or as they’re commonly known, “free college,” programs. Tennessee launched the Tennessee Promise in 2014; the city of Chicago launched a free-two-year-community-college program. And in January of 2015, as President Obama stood before Congress and delivered his annual State of the Union address, he brought the idea to a national stage. “I want to spread that idea all across America, so that two years of college becomes as free and universal in America as high school is today,” he said. The president began pushing for his America’s College Promise proposal, which would have offered two years of community college free to “responsible students.” This was, at the time, an ambitious idea, but four months later, Obama was one-upped. Senator Bernie Sanders, who was vying for the presidency in 2016, announced his plan to make public colleges and universities tuition-free for all.

“It may seem hard to believe, but there was a time when higher education was pretty close to free in this country, at least for many Americans,” Sanders wrote in The Washington Post a few months after first announcing his plan. “It is time to build on the progressive movement of the past and make public colleges and universities tuition-free in the United States—a development that will be the driver of a new era of American prosperity.” If Obama lit the match, Sanders, as part of his primary bid, doused it in kerosene.

For years, Smith Ellis said, politicians had been saying that they would make college more affordable, but that begged the question: What is “more affordable”? Sure, there were calls to increase the Pell grant to put college within reach, but “that does not mean anything in terms of the tangible What is it that I pay in your ‘more affordable’?” she said. “The thing people really gravitated to with [Sanders] was, ‘I get that this “more affordable” means I won’t have to pay tuition.” Of course, there are other costs associated with college, but tuition-free college was a sticky, easy-to-understand concept that, once planted, all other ideas had to compare with.

Separately, a month after Sanders released his plan, Senator Elizabeth Warren announced a debt-free college plan—one that went beyond Sanders’s to include costs other than tuition, such as books, housing, and food. But this was hardly the party line. These were two of the most progressive Democratic senators proposing progressive policy. Most of the party’s leaders were still supporting smaller-scale interventions such as tying the Pell grant to inflation or student-loan refinancing.

This divide was put on display in February 2016 during the fifth Democratic debate, where Hillary Clinton and Sanders squared off. “I … believe in affordable college, but I don’t believe in free college,” Clinton said, “because every expert that I have talked to says, ‘Look, how will you ever control the costs?’ What I want to do is make sure middle-class kids, not Donald Trump’s kids, get to be able to afford college.” Sanders retorted that he knew a way to control the costs. “It’s an expensive proposition,” he said. “We pay for it, in my view, by a tax on Wall Street speculation. The middle class bailed out Wall Street in their time of need. Now it is Wall Street’s time to help the middle class.”

Clinton began to feel the pressure of a shift that, despite its bubbling up at the state level, had caught policy experts by surprise coming from a presidential candidate. By July 2016, Clinton had her own free-college proposal: making public college tuition-free for students from families who made less than $125,000 a year. Sanders called Clinton’s proposal a “very bold initiative,” adding that “the final product is the work of both campaigns.”

The idea of free college went dormant on the federal level after Donald Trump was elected. Sure, Democrats such as Senator Brian Schatz of Hawaii proposed legislation to make college “free,” but there were no reasonable expectations that it would move. Senators Kamala Harris, Kirsten Gillibrand, and Cory Booker, all candidates for president in 2020, signed on to Schatz’s bill.

The Democrats did not have power in either chamber of Congress early in the Trump presidency, so new legislation they introduced was largely for messaging purposes. Their primary, comprehensive offering on higher education came with the Aim Higher Act, which was notably more modest than the one-off free-college bills. It offered expanded Pell grants, free community college, and a crackdown on for-profit institutions. But the bill also played to a conventional wisdom. As Amy Laitinen, the director of higher-education policy at New America, a liberal think tank, put it to me, “In a world where we have financial constraints, and where we don’t have unlimited resources, or even a huge infusion of new resources, the truth is, choices are going to have to be made about where dollars are spent.” For congressional Democrats, the priority seems to be on expanding resources to available programs.

But presidential elections are times when parties can play around with—and possibly embrace—new, previously out-there ideas. They make room for the land of what’s possible, the landscape that could be. And as candidates have come to recognize that a growing share of the electorate is saddled with student-loan debt, those reimagining the landscape are taking more of a slash-and-burn approach than manicuring the hedges, whether that’s Warren’s proposal for large-scale debt cancellation, Harris’s push for debt-free college in her campaign launch, or Sanders’s ongoing cry for free college.

“There’s this feeling that this stuff that’s tinkering around the edges isn’t working,” Miller said. And a presidential election is a time when the hope that things will change still feels real.